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Measuring productivity growth, technical progress, and efficiency changes of CPA firms prior to, and following the Sarbanes-Oxley Act

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  • Chang, Hsihui
  • Choy, Hiu Lam
  • Cooper, William W.
  • Parker, Barnett R.
  • Ruefli, Timothy W.

Abstract

This paper investigates productivity growth, technical progress, and efficiency change for a group of the 56 largest CPA firms in the US from the period 1996-1999 through the period 2003-2006, where the former preceded, and the latter followed, enactment of the Sarbanes-Oxley Act (SOX). Data envelopment analysis (DEA) is used to calculate Malmquist indices of three measures of interest: productivity growth, technical progress, and efficiency change. Results indicate that CPA firms, on average, experienced a productivity growth of approx. 17% from the pre- to post-SOX period. Consistent with the finding of Banker et al. [Banker RD, Chang H, Natarajan R. Productivity change, technical progress and relative efficiency change in the public accounting industry. Management Science 2005;51:291-304], this productivity gain can be attributed primarily to technical progress rather than a change in relative efficiency. In addition, results indicate that the "Big 4" firms underperformed their non-Big 4 counterparts in both productivity growth and technical progress.

Suggested Citation

  • Chang, Hsihui & Choy, Hiu Lam & Cooper, William W. & Parker, Barnett R. & Ruefli, Timothy W., 2009. "Measuring productivity growth, technical progress, and efficiency changes of CPA firms prior to, and following the Sarbanes-Oxley Act," Socio-Economic Planning Sciences, Elsevier, vol. 43(4), pages 221-228, December.
    • Handle: RePEc:eee:soceps:v:43:y:2009:i:4:p:221-228
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    References listed on IDEAS

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