Journal article
Returns to scale pattern and efficient firm size in the public accounting industry: an empirical investigation
The Journal of the Operational Research Society, v 60(11), pp 1495-1501
01 Nov 2009
Featured in Collection : UN Sustainable Development Goals @ Drexel
Abstract
This paper employs Data Envelopment Analysis to investigate returns to scale patterns and efficient firm size in the public accounting industry in the USA post-Sarbanes-Oxley Act. Using contemporary survey data from Accounting Today's top-100 accounting firms for the years 2003 and 2004, our results indicate that the very largest accounting (first tier) firms display constant returns to scale, whereas approximately half of the smaller (second tier) firms exhibit increasing returns to scale. These findings suggest that while very large firms are optimally scaled, there still are economic efficiencies to be gained through expanding the size of nearly half of the second-tier accounting firms. Results for the remaining second-tier firms show either constant or decreasing returns to scale, indicating that they are either already optimally sized or that they should consider contraction. The results for the second-tier firms remain qualitatively unchanged when the first-tier firms are excluded from the estimation.
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Details
- Title
- Returns to scale pattern and efficient firm size in the public accounting industry: an empirical investigation
- Creators
- H Chang - Drexel UniversityC Galantine - Pepperdine UniversityA Thevaranjan - Syracuse University
- Publication Details
- The Journal of the Operational Research Society, v 60(11), pp 1495-1501
- Publisher
- Taylor & Francis
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Accounting
- Web of Science ID
- WOS:000270140800004
- Scopus ID
- 2-s2.0-70349505752
- Other Identifier
- 991019168549904721
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- Collaboration types
- Domestic collaboration
- Web of Science research areas
- Management
- Operations Research & Management Science