Analysis of Competition in Taiwan's Public Accounting Industry

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Title:	Analysis of Competition in Taiwan's Public Accounting Industry
Authors:	Chang, Bao-Guang;Huang, Tai-Hsin;Wang, Hsiu-Mei
Contributors:	淡江大學經濟學系
Keywords:	public accounting industry;degrees of competition;PR non-structural test;censored stochastic frontier model
Date:	2013-05
Issue Date:	2013-11-07 11:09:42 (UTC+8)
Publisher:	新北市：淡江大學企業管理學系
Abstract:	This paper investigates the degree of market competition in the public accounting industry of Taiwan over the period of 1994-2008, using the 'R-statistic' proposed by Panzar & Rosse (1987). Differing from previous works, this paper applies the newly developed model, i.e., the censored stochastic frontier (CSF) model, to test whether audit markets under consideration have achieved the long-run equilibrium. The model is superior to the conventional one that requires researchers adding unity to dependent variable ROA for all observations to force the transformed dependent variable having a positive value and being able to take the natural logarithm. Evidence is found that Taiwan's accounting industry is characterized as either monopolistic competition, and over time has been a trend towards a fully competitive type. The CSF model confirms that market of Taiwan's accounting industry is already in the long-run equilibrium, which validates the use of Panzar-Rosse model. Conversely, the employment of the conventional approach leads to a rejection of the long-run equilibrium in Taiwan's accounting industry.
Relation:	2013年(第八屆)提升競爭力與經營管理研討會論文集，頁93-112
Appears in Collections:	[Graduate Institute & Department of Economics] Proceeding

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