Economies of scale and scope in Taiwan's CPA service industry

Abstract

Based on the 1994 survey data of certified public accountant (CPA) firms in Taiwan, and by applying the iterative seemingly unrelated regression (SUR) technique to a simultaneous system of a translog multi-product cost function and its corresponding factor share equations, an attempt is made to investigate the extents of economies of scale and scope in Taiwan's CPA service industry. The empirical results show that product-specific scale economies exist for auditing, tax and management advisory services. Ray scale economies are significantly present. Significant economies of scope exist in providing tax and management advisory services.