MARKET COMPETITION AND MERGERS IN PROFESSIONAL SERVICE FIRMS

Yi-Fang Yang, Lee-Wen Yang and Yahn-Shir Chen

The International Journal of Business and Finance Research, 2012, vol. 6, issue 3, 103-122

Abstract: This study examines competition level and merger in Taiwanese audit industry over a long time interval of 1992-2008. Total public accounting firms are divided into four sub-samples in terms of market segment, including big, large, medium, and small firms. Next, based on prior studies and service attribute, this study establishes four practice sub-markets: auditing, tax, consultation, and accounting. Empirical results indicate that big firms have the highest competition level but the other three sub-samples show no significant differences in competition level. Next, the auditing, tax, and accounting sub-markets become more concentrated over time but consultation sub-market does not change significantly. Big firms exhibit the highest competition level in the four sub-markets and four sub-markets but achieve the best in three financial performance measures, net profit per partner, profit ratio, and productivity per employee. Post-merger firms financially outperform pre-merger firms for Taiwanese two big firms’ mergers occurred in 1999 and 2003.

Keywords: Market Competition; Herfindahl-Hirschman Index; Operating Performance; Public Accounting Firms (search for similar items in EconPapers)
JEL-codes: M42 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (1)

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