Accounting Firm Association Membership and Audit Firm Growth

• In Event: Audit Market Competition

Abstract

In this study, we explore a topic of primary concern to small audit firms – attracting new clientele. A potential avenue available to small audit firms to enhance their visibility and legitimacy among potential audit clients is to join an affiliation of accounting firms known as an accounting association. We examine whether small audit firms with accounting association membership have greater client growth than their peer audit firms without association membership. We separately explore growth in private and public clients. Using hand-collected data, we find that small audit firms with accounting association membership gain approximately 38 percent (5 percent) more private (public) clients over a two-year period than those without association membership. We find that this growth is due to both gaining new entrants into the audit market and winning over clients from competitors. Further, we find that the reputation of an association positively affects the client growth seen by member firms. .

Authors

• Jaehan Ahn, Northeastern University

• Herita Akamah, University of Nebraska-Lincoln

• Kenneth L Bills, University of Arkansas

• Kristen Kelli Saunders, University of Nebraska-Lincoln