ATJ Asian Tax Journal

Asian Tax Journal

Print ISSN 1738-3323 Online ISSN 2733-9270

The Impact of Accounting Reform Legislations on the Production Efficiency of Korean Accounting Firms

  • Seok-Young Lee Department of Business Administration, College of Social Sciences, Sungshin Women's University
  • Sang-Lyul Ryu School of Business Administration, Konkuk University

Asian Tax Journal Vol. 14 No. 4 (2013), pp. 73-99

Abstract

The purpose of this study is to examine the impact of Korean accounting reform legislations on the efficiency of Korean public accounting firms. To address this research question, we collected 285 observations of Korean accounting firm data from their annual reports from 2003 through 2007. In the first stage, Output based Data Envelopment Analysis (DEA) is used to compute the efficiency scores of public accounting firms. Auditing revenue, taxation revenue, and management advisory service revenue are used as output variables. Input variables are total number of employees and total assets. In the second stage, the logarithm of DEA efficiency scores is regressed on contextual variables to obtain consistent estimators of the impact of contextual variables on efficiency. Empirical results indicate that the efficiency of Korean accounting firms have decreased significantly since Korean accounting reform legislation was implemented in 2005. This implies that Korean accounting reform legislation has had a negative impact on revenue structure and operational efficiency of accounting firms. In addition, accounting firms with Big 4 affiliation, the lower proportion of management advisory service out of total revenues, and the higher proportion of partner out of total employees are shown to have generated higher efficiency. The main contribution of this study is that we attempt to measure the impact of Korean accounting reform legislation on the efficiency of public accounting firms. The insights gleaned from this paper can be helpful when managers of accounting firms establish strategies for an increase in efficiency and productivity.

Keywords

  • accounting reform legislation
  • public accounting firm
  • production efficiency
  • Data Envelopment Analysis (DEA)

Related Articles

ATJ
E-SubmissionSitemapContact Us RSS

Asian Tax Journal

Address : 3F, KICPA Bldg., 12 Chungjeongro 7-gil, Seodaemun-gu, Seoul 03736, Republic of Korea

Editor-in-Chief : Prof. Wanyong Kim Editorial Office : Dept. of Finance, Accounting & Taxation, Hanyang Cyber University, 220 Wangsimni-ro, Seongdong-gu, Seoul, Republic of Korea Tel : +82-2-2290-0418 / +82-10-8664-1117 E-mail : taxresearch2@hanmail.net