The Impact of Non-Audit Services on Accounting Firm Productivity

Abstract

Based on a two-stage analysis of a panel of data for 25 Korean accounting firm for 16 years from 1997 to 2012, the researcher investigates how non-audit services affect accounting firm productivity. In the first stage, the researchers employ Data Envelopment Analysis (DEA) to compute the relative productivity of accounting firms in using their human resources to generate firm revenues. In the second stage, the researcher estimate regression models that relate the logarithm of DEA productivity scores to the mix of services provided and control variables. Empirical results support my research hypotheses that accounting firm productivity, in terms of revenue generation based on human resources utilized, decreases with greater provision of taxation services and increases with greater provision of management advisory services.