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Purpose To maintain auditor independence, Section 201 of the Sarbanes–Oxley Act of 2002 (SOX) imposes restrictions on audit firms in rendering management advisory services (MASs) to audit clients. Responding to the requirement, audit firms establish a strategic alliance with consulting companies to expand their scope of services to alleviate the impairment of auditor independence. Taiwan follows the spirit of SOX in related laws and regulations. To investigate the effects of SOX on Taiwanese auditing industry, this study aims to examine the relationship between MASs and operating performance of audit firms. Design/methodology/approach This study obtains empirical data from the 1989–2017 Survey Report of Audit Firms in Taiwan, published by the Financial Supervisory Commission (FSC). FSC administers the survey across all registered audit firms annually to collect business information on the auditing industry for macro-economic analysis and industrial policy development. The authors group audit firms into three categories: national, regional and local firms. Based on the structure-conduct-performance (S-C-P) theoretical framework, this study establishes the following cross-sectional regression equation to test the authors’ hypotheses. Findings Main results indicate that national firms have better post-SOX firm and alliance performance. Both firm and alliance MASs contribute more to the performance of national firms after SOX. Practical implications This study claims that national firms establish alliance with consulting companies for resource sharing but regional and local firms for tax-saving. Originality/value Consistent with the economic theory of regulation and resource-based theory, SOX matters in Taiwan.

This study aimed to investigate the effect of the independent commissioner and of the characteristics of the audit committee (measured by auditor size, independence, expertise, and activities) on the efficient or opportunistic earnings management. In terms of those companies listed on Indonesia Stock Exchange. The sample consists of 186 observations of those manufacturing companies in Indonesia Stock Exchange during the 2013-2018. Using panel regression fixed effect method, independent commissioners are found to have a significant effect on reducing earnings management. Based on The Positive Accounting Theory, the efficient perspective will occur when the compensation contract and internal control system, including monitoring done by the board of commissioners, limit the common view opportunistic manager and motivate the manager to choose the right accounting policy. The effective monitoring conducted by an independent commissioner can reduce agency costs because management prioritizes the best interests of shareholders by maximizing company resources. Furthermore, it was found that audit committee size can reduce earning management. It is due to the wide range of skills possessed by audit committee members to exercise oversight over management. Audit committees with accounting and financial expertise can reduce earnings management. This part of finding indicates that audit committee may tend to uphold conservative as accounting mechanism. Accounting conservatism has an important role to play in restricting opportunistic management behavior.

Since the outbreak of the COVID-19 pandemic, the rapid spread of COVID-19 around the world has become one of the main focuses of concern in almost every country, and governments have taken numerous measures to prevent/mitigate the spread of the disease. As an essential social determinant, COVID-19 has significantly impacted consumers’ food consumption behavior and healthy eating habits/behaviors. The purpose of this study is to analyze the impact of COVID-19 on food consumption behavior, and the main goal was to assess the possible problems (such as food waste and weight gain) caused by changes in food consumption behavior during the pandemic. Based on the accounting data of Chinese enterprises found in the China Stock Market and Accounting Research (CSMAR) database, this study uses economic theory and the translog function to conduct an average partial effect (APE) analysis of the pandemic, and finds that the COVID-19 pandemic has increased Chinese people’s overall food consumption, and the consumption of food from large food enterprises has increased even more (APE = 0.11 vs. APE = 0.31). This study suggests that food waste and weight gain in the Chinese population may be more severe during the pandemic, and it is necessary to enhance food management and weight management through multiple pathways.

Two professional service organizations, an auditor and a tax agent, provide services to the same target clients. Taiwan established a new regulatory system for tax agents in 2004, which directly enhances their ability to compete with auditors. From the perspective of the economic theory of regulation, this study investigates the indirect effects of the new regulatory system on the business of auditors. We focus on auditors in proprietorship audit firms and divide the sample period into before and after 2004. This study establishes a cross-sectional regression equation to test our hypotheses. We classify the types of business into three levels, total amount, three categories and six individual items. Based on the 1989&ndash, 2017 Survey Report of Audit Firms in Taiwan, we find that auditors perform better after 2004, indicating that increased competition leads to positive sustainability for auditors. Further results show that the effects of the regulation on auditors&rsquo, performance are greater after 2004, additional evidence of the positive indirect effect on auditors. This study contributes to the literature, provides public policy implications to regulators and contributes managerial information to auditors.

Taiwan and Japan initiated an industrial cooperation policy and incentive measures in 2011. Five Japanese prefectures in the Tokai Region actively communicated and cooperated with Taiwan after 2011. This motivated us first to address the economic and trade ties between Taiwan and Japan. Second, we compared and analyzed effects of the industrial cooperation policy on the five prefectures, their willingness to cooperate with Taiwan, and the topics brought up by the industry cooperation. Main results indicate that the policy offers positive incentives for industries and enterprises, and the cooperation between enterprises creates mutual benefits. In sum, the bilateral industrial cooperation brings about a win&ndash, win situation. With the findings, we make suggestions on future development direction and for the Taiwan&ndash, Japan industrial cooperation.

Purpose The purpose of this paper is to examine the direct and interactive effects of audit service quality and audit market concentration on performance of public accounting firms in Taiwan. Design/methodology/approach Empirical data of this study come from registered public accounting firms in Taiwan, an industrial data. From the perspective of industrial economics and based on the structure-conduct-performance paradigm (Cowling and Waterson, 1976), this study use OLS to test the linear regression equation. Findings Empirical results indicate that both audit service quality and audit market concentration have positive effects on performance. The interaction terms between audit service quality and audit market concentration are positively related to performance. Practical implications This documents that human capital is the core resource in public accounting firms which could enhance performance through higher audit service quality under intense market competition. Specifically, facing increasingly competitive audit market, public accounting firms response to the hostile situation by employing auditors with higher educational level, more work experience, with professional licenses, and taking more continuing professional education. Originality/value Few previous researches consider the effects of either market concentration or audit service quality on firm performance. This study simultaneously examines the relation among audit service quality, audit market concentration, and performance of public accounting firms. With the results, this study contributes knowledge to human resource and quality management-related literatures.

This study investigates the signalling role and rectification effectiveness of an audit partner disciplinary system. The signalling role refers to whether sanctions reflect the poor audit quality of disciplined audit partners, and rectification effectiveness addresses whether disciplinary actions enhance subsequent audit quality. The sample consists of Taiwanese listed companies, in the period 2000 to 2006, where the identities of audit partners who sign audit reports and who are sanctioned are accessible. Empirical results indicate that in the pre-sanction period, the probability of financial restatements by clients of disciplined audit partners is significantly higher than that of non-disciplined audit partners. The more severe or frequent the sanctions, the higher the likelihood of financial restatements in the pre-sanction period. These findings imply that audit partner disciplinary actions can serve as a signal of lower audit quality provided by those partners. The rectification effectiveness of disciplinary actions is examined from two perspectives: (1) the effects on subsequent improvements of audit quality of disciplined audit partners; and (2) audit quality enhancement of successor non-disciplined audit partners who accept clients from disciplined audit partners. Empirical results show a lower probability of restating financial statements audited by disciplined audit partners after sanctions. We also find a lower likelihood of restating financial statements audited by successor non-disciplined audit partners in the post-sanction period. Both findings support our conclusion that audit partner sanctions improve audit quality. Overall, audit partner disciplinary actions can signal lower quality audit partners and are effective in enhancing audit quality.

This study examines the association between professional training, higher academic qualifications (educational levels) and operating performance of audit firms in Taiwan. We particularly focus on the curvilinear effects of higher academic qualifications on operating performance. We group the total sample into three categories: national, regional and local audit firms. Based on the theoretical framework in industrial economics, we establish a cross-sectional multiple regression equation to test our hypotheses. Both higher academic qualifications and professional training are positively related to the operating performance of audit firms. Professional training moderates the relation between higher academic qualifications and operating performance. Higher academic qualifications exhibit a curvilinear effect on operating performance with a reverse U-shaped relation for the national audit firms and a U-shaped relation for both regional and local audit firms. Due to data unavailability, some factors affecting the audit quality and operating performance are not included in our analysis, such as auditor teamwork, internal control system, operating policies and auditing procedures of audit firms. The findings that higher academic qualifications are positively associated with the operating performance of audit firms justify the educational policy of establishing institutes or graduate schools in accounting over the past two decades. Furthermore, audit firms skillfully exploit employees with higher academic qualifications to improve their operating performance. We are the first to document the moderating effects of professional training and the curvilinear association between higher academic qualifications and operating performance, contributing knowledge to related literature.

We examine whether companies change their auditor to shop for accounting accruals and whether these shopped accruals are related to financial restatements. The results show that the negative discretionary accruals audited by successor auditors (1) are significantly higher than those audited by predecessor auditors and (2) increase the likelihood of income-decreasing restatements, suggesting understatements for these shopped negative discretionary accruals. These results are salient in companies switching from a Big 4 to a non-Big 4 auditor. Overall, companies shop for accounting accruals successfully, especially from a Big 4 to a non-Big 4 auditor, and consequently restate downward their reported earnings.

Business groups are currently one of the most crucial organizational forms worldwide. However, unlike stand-alone companies, related companies in business groups experience the agency problem of tunneling. We investigate the association between the agency problem of tunneling and the concentration of audit firm selections in business groups. On the basis of Taiwanese business groups from 1999 to 2007, we use the divergence between voting rights and cash flow rights to measure the agency problem of tunneling. Our results show that higher group divergence decreases the number of audit firm selections in business groups. In addition, auditors who audit more related companies in business groups weaken the negative association between divergence and earnings quality as proxied by discretionary accruals, financial restatements, and value-relevance of earnings. Overall, controlling shareholders with higher divergence concentrate on audit firm selections in their business groups to enhance earnings quality, consistent with the agency hypothesis of the demand for audit quality.