Accounting Firm Association Membership and Audit Firm Growth

52 Pages Posted: 12 Feb 2018 Last revised: 13 Jul 2018

See all articles by Jaehan Ahn

Jaehan Ahn

Northeastern University - Accounting Group

Herita T. Akamah

University of Nebraska at Lincoln - School of Accountancy

Kenneth L. Bills

University of Arkansas

K. Kelli Saunders

University of Nebraska at Lincoln - School of Accountancy

Date Written: July 2018

Abstract

In this study, we explore a topic of primary concern to small audit firms – attracting new clients. A potential avenue available to small audit firms to enhance their visibility and legitimacy among potential audit clients is to join an association of accounting firms. We examine whether small audit firms with accounting association membership have greater clientele growth than their peer audit firms without association membership. We separately explore growth in private and public clientele. 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 clientele growth seen by member firms.

Keywords: associations, networks, small audit firms, clientele growth, legitimacy

JEL Classification: L22, M40, M41, M42

Suggested Citation

Ahn, Jaehan and Akamah, Herita T. and Bills, Kenneth L. and Saunders, K. Kelli, Accounting Firm Association Membership and Audit Firm Growth (July 2018). Northeastern U. D’Amore-McKim School of Business Research Paper No. 3120493. Available at SSRN: https://ssrn.com/abstract=3120493 or http://dx.doi.org/10.2139/ssrn.3120493

Jaehan Ahn

Northeastern University - Accounting Group ( email )

404 Hayden Hall
360 Huntington Ave.
Boston, MA 02115
United States

Herita T. Akamah

University of Nebraska at Lincoln - School of Accountancy ( email )

307 College of Business Administration
Lincoln, NE 68588-0488
United States

Kenneth L. Bills (Contact Author)

University of Arkansas ( email )

Fayetteville, AR 72701
United States

K. Kelli Saunders

University of Nebraska at Lincoln - School of Accountancy ( email )

307 College of Business Administration
Lincoln, NE 68588-0488
United States

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