IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

A comparison of the technical efficiency of accounting firms among the US, China, and Taiwan under the framework of a stochastic metafrontier production function

Listed author(s):
  • Bao-Guang Chang

    ()

  • Tai-Hsin Huang

    ()

  • Chun-Yi Kuo

    ()

Registered author(s):

    This study employs the newly developed stochastic metafrontier production function by Huang et al. (A new approach to estimating the metafrontier production function based on a stochastic frontier framework. Working paper, Vanderbilt University, National Cheng-chi University, Taiwan, 2012 ) to compare the technical efficiencies of accounting firms (AFs) among the US, China, and Taiwan, operating under different technologies. Although AFs play an important role in a nation’s capital market, the accounting industry has not attracted much attention to academic researchers. The main difference between the stochastic metafrontier function and the one proposed by Battese et al. (J Prod Anal 21:91–103, 2004 ) and O’Donnell et al. (Empir Econ 34:231–255, 2008 ) lies in the second step, where the stochastic frontier approach (SFA) is recommended instead of programming techniques. Taiwan’s AFs are found to have the highest average metafrontier technical efficiency (MTE) and AFs in the US have the highest technology gap ratio (TGR). Nonetheless, the average TGR and MTE values of American AFs are closer to those of Taiwan. The low performance of Chinese AFs may be attributed to government regulations and the lack of market competition. However, the programming technique suggests reverse results for AFs in Taiwan and the US and larger variances for TGR and MTE. Then these three countries’ AFs show decreasing returns to scale, indicating that mergers and acquisitions may not be advantageous for expanding their production scale. Copyright Springer Science+Business Media New York 2015

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://hdl.handle.net/10.1007/s11123-014-0397-8
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Article provided by Springer in its journal Journal of Productivity Analysis.

    Volume (Year): 44 (2015)
    Issue (Month): 3 (December)
    Pages: 337-349

    as
    in new window

    Handle: RePEc:kap:jproda:v:44:y:2015:i:3:p:337-349
    DOI: 10.1007/s11123-014-0397-8
    Contact details of provider: Web page: http://www.springer.com

    Order Information: Web: http://www.springer.com/economics/microeconomics/journal/11123/PS2

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    as
    in new window


    1. Rajiv D. Banker & Hsihui Chang & Ram Natarajan, 2005. "Productivity Change, Technical Progress, and Relative Efficiency Change in the Public Accounting Industry," Management Science, INFORMS, vol. 51(2), pages 291-304, February.
    2. Brocheler, Vera & Maijoor, Steven & van Witteloostuijn, Arjen, 2004. "Auditor human capital and audit firm survival: The Dutch audit industry in 1930-1992," Accounting, Organizations and Society, Elsevier, vol. 29(7), pages 627-646, October.
    3. Yujiro Hayami, 1969. "Sources of Agricultural Productivity Gap Among Selected Countries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 51(3), pages 564-575.
    4. George Battese & D. Rao & Christopher O'Donnell, 2004. "A Metafrontier Production Function for Estimation of Technical Efficiencies and Technology Gaps for Firms Operating Under Different Technologies," Journal of Productivity Analysis, Springer, vol. 21(1), pages 91-103, January.
    5. Rajiv Banker & Hsihui Chang & Ram Natarajan, 2007. "Estimating DEA technical and allocative inefficiency using aggregate cost or revenue data," Journal of Productivity Analysis, Springer, vol. 27(2), pages 115-121, April.
    6. Robert H. Parker & Richard D. Morris, 2001. "The Influence of U.S. GAAP on the Harmony of Accounting Measurement Policies of Large Companies in the U.K. and Australia," Abacus, Accounting Foundation, University of Sydney, vol. 37(3), pages 297-328.
    7. George E. Battese & D. S. Prasada Rao, 2002. "Technology Gap, Efficiency, and a Stochastic Metafrontier Function," International Journal of Business and Economics, College of Business and College of Finance, Feng Chia University, Taichung, Taiwan, vol. 1(2), pages 87-93, August.
    8. Chen, Ku-Hsieh, 2012. "Incorporating risk input into the analysis of bank productivity: Application to the Taiwanese banking industry," Journal of Banking & Finance, Elsevier, vol. 36(7), pages 1911-1927.
    9. Víctor Moreira & Boris Bravo-Ureta, 2010. "Technical efficiency and metatechnology ratios for dairy farms in three southern cone countries: a stochastic meta-frontier model," Journal of Productivity Analysis, Springer, vol. 33(1), pages 33-45, February.
    10. Hayami, Yujiro & Ruttan, Vernon W, 1970. "Agricultural Productivity Differences Among Countries," American Economic Review, American Economic Association, vol. 60(5), pages 895-911, December.
    11. Banker, Rajiv D. & Chang, Hsihui & Cunningham, Reba, 2003. "The public accounting industry production function," Journal of Accounting and Economics, Elsevier, vol. 35(2), pages 255-281, June.
    12. Bos, J.W.B. & Schmiedel, H., 2007. "Is there a single frontier in a single European banking market?," Journal of Banking & Finance, Elsevier, vol. 31(7), pages 2081-2102, July.
    13. Christopher O’Donnell & D. Rao & George Battese, 2008. "Metafrontier frameworks for the study of firm-level efficiencies and technology ratios," Empirical Economics, Springer, vol. 34(2), pages 231-255, March.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:kap:jproda:v:44:y:2015:i:3:p:337-349. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)

    or (Rebekah McClure)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.