The Impact of the Amendment of Taiwan’s Certified Public Accountant Act in 2007 on Large Accounting Firms

Chung-Cheng Yang,Jianxiong Chen,Wen-Chi Yang

doi:10.3390/su13031229

Chung-Cheng Yang, Jianxiong Chen + Show 1 more

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https://doi.org/10.3390/su13031229

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Abstract

Taiwan’s Financial Supervisory Commission of the Executive Yuan promulgated the fully amended Certified Public Accountant Act in 2007, which directly led to significant changes in accounting law. From the perspective of the economic theory of law, this study investigates the amendment of the Certified Public Accountant Act resulting in an increase or decrease in the overall revenue and different revenue shares of accounting firms, and puts forward measures that should be taken by accounting firms and stakeholders. We focus on large accounting firms and divide the sample period into before and after 2008. This study uses the translog revenue function and revenue share functions of the public accounting industry, and based on the 1989–2017 Survey Report of Audit Firms in Taiwan, and we find that the amendment of the Certified Public Accountant Act has had a positive effect on overall revenue, increasing overall revenue and the overall management advisory services shares, and in reducing the overall accounting and auditing shares and tax services shares of large accounting firms. Additional analyses provide regulators with public policy implications and provide accounting firms with managerial information.

Highlights

Background and Hypothesis DevelopmentResearchers and policy makers have long been interested in the issuance or amendment of laws
From the perspective of revenue in economic theory, by discussing the amendment of accounting law and their effects on accounting firms, we find that the amendment of the Certified Public Accountant Act has had a positive effect on overall revenue, increasing overall revenue and the overall management advisory services shares, and in reducing the overall accounting and auditing shares and tax services shares of large accounting firms
After we conducted interviews with large accounting firms, we summarized the average years of working experience of partner accountants and professional accountants and calculated them

Summary

Introduction

Background and Hypothesis DevelopmentResearchers and policy makers have long been interested in the issuance or amendment of laws. (These include studies of the Tax Reform Act [11,12,13,14], the Economic. Recovery Tax Act [29,30,31], IFRS16 [15,16,17], the Securities Act [18], the America Invents. Act [44].) The focus of these studies is on the significant impact of the promulgation or amendment of laws on society or related industries. The issuance and replacement of audit-related laws has a significant impact on the public accounting industry. SOX has made a historic change in the norms of the public accounting industry. Li [10] found a change in the correlation between audit (and total) fees and going concern opinions, i.e., from no correlation at all in 2001 to a positive correlation in

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