earticle

영어

The purpose of this study is to analyze efficiency and productivity changes of Korean accounting firms for the 1997-2005 period. Further, we also examine efficiency change, pure efficiency change, scale efficiency change and technical change over time to address what factors have driven the productivity changes of Korean accounting firms. To explore our research question, we use DEA (Data Envelopment Analysis) developed by Charnes, Cooper, and Rhodes(1978) and Banker, Charnes, and Cooper(1984) and Malmquist productivity index developed by Fare, Grosskopf, Norris, and Zhang(1994). Total number of employees and total assets of accounting firms are used as input variables, and auditing revenue, taxation revenue, and management advisory service revenue are used as output variables. The main results of our paper are summarized as follows. First, our cross-sectional analysis in 2005 shows that the technical efficiency of Korean accounting firms averages 0.764, the pure technical efficiency 0,811, and the scale efficiency 0.944. Out of total 78 accounting firms, 50 firms indicate that they are under increasing returns to scale. Second, our time-series analysis demonstrates that yearly average technical efficiency decreased sharply in 2002 after the Korean Ministry of Finance and Economics loosened the establishment criteria for new accounting firms. This decrease in the average technical efficiency was caused by Non-Big4 accounting firms, not by Big4 accounting firms. Third, our Malmquist productivity index analysis reveals that overall yearly productivity improves over time because technical change has made a positive impact on the productivity changes of Korean accounting firms over the 1997-2005 period. However, the productivity improvement is smaller for the period in which the new establishment criteria for new accounting firms have been applied since 2001.