The association between continuing professional education and financial performance of public accounting firms

Abstract

This study investigates the relationship between continuing professional education (CPE), a mechanism of professional training, and financial performance of public accounting firms. Both training subject (partner and assistant) and training location (internal and external) are included. Public accounting firms are categorized as big, medium, and small-sized ones. Empirical data are obtained from the 1992–1995 Survey Report of Public Accounting Firms in Taiwan, published by the Financial Supervisory Commission, Executive Yuan, Taiwan, ROC. Univariate test and multiple-regression model are employed to examine the financial performance effects of CPE. Main results indicate that both professional training of assistants and external professional training are positively related to financial performance in big-sized firms. Next, we document a significantly positive association between internal training of assistants and financial performance in either big-, medium-, or small-sized firms. Finally, both external professional training of partners in big-sized firms and external professional training of assistants in small-sized firms are positively related to financial performance. Few prior studies investigate professional training of public accounting firms by a regression model due to availability of empirical data. Accordingly, evidences obtained in this study provide useful information to partners for decision-making in public accounting firms under the considerably competitive audit market.

Keywords:

• continuing professional education (CPE)
• financial performance
• public accounting firms
• training location
• training subject

Notes

* Data is commercially available from the Financial Supervisory Commission, Executive Yuan, Taiwan (ROC).

1. The terms professional training and CPE will be used interchangeably throughout this study.

2. The US Bureau of Census administers Educational Quality of the Workforce National Employee Survey (EQW-NES) of manufacturing and non-manufacturing firms. Lynch and Black (1997) report the survey results.

3. The Ministry of Finance has administered the survey of public accounting firms in Taiwan since 1989. In 1991, the survey was included in Taiwan Commerce and Service Industry Census administered by the Directorate-General of Budget, Accounting and Statistics. Thus, data of 1991 are excluded due to data availability. Since 2004, the survey of public accounting firms has been administered by the Financial Supervisory Commission, Executive Yuan, Taiwan (ROC).