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Productivity Analysis of UK Auditing Firms
Author(s) -
Barros Carlos Pestana,
Couto Eduardo,
Samagaio António
Publication year - 2014
Publication title -
australian accounting review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.551
H-Index - 36
eISSN - 1835-2561
pISSN - 1035-6908
DOI - 10.1111/auar.12060
Subject(s) - productivity , audit , technical change , directive , technological change , accounting , business , investment (military) , production (economics) , goods and services , economics , economy , economic growth , politics , computer science , political science , law , programming language , macroeconomics
This study analyses the productivity change in the United Kingdom (UK) of auditing firms over the period 2005–2012, using a Malmquist index with a technological bias. Productivity is the rate at which goods or services are produced relative to the input. A common measure of productivity is the ratio of output per unit of labour used in the production. Productivity change is the change in the total output relative to the change in the total input and it is composed of technical efficiency change (managerial practices and scale effects) and technological change (innovation and investment in new technologies). Until 2005, the auditing profession in the UK employed a regime of self‐regulation; after a brief hiatus, the country adopted the new European Statutory Audit Directive in April 2008, changing the regulatory framework. This study analyses the productivity change among UK auditing companies both before and after the regulation change. Our results indicate that the productivity change among UK auditing companies is mixed and not dictated by regulation. Furthermore, the traditional growth accounting method, which assumes Hicks‐neutral technological change, is not appropriate for an analysis of the productivity change in auditing firms.