The post-SARBOX accounting industry, Part II
Malcolm McLelland
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In "The post-SARBOX accounting industry, Part I" I presented a graph showing the accounting industry revenue growth rate had decreased significantly in recent years. We all know, of course, that revenues are the result of productivity; they really aren't production per se. Setting aside the (very real) difficulties of measuring output independently of the monetary value of the output, it's worthwhile to look at a time series graph of accounting/audting industry output based on data obtained from the Bureau of Economic Analysis' (which, by the way, was where the data came from underlying the graph presented in "The post-SARBOX accounting industry, Part I"):
Much the same as the graph of accounting industry revenues, the accounting industry's output growth rate is subtantially lower in the post-Sarbanes-Oxley environment than in the pre-Sarbanes-Oxley environment. Well, well, well. Does this mean the outlook for the accounting/audting industry is bleak? Maybe or maybe not. But to the extent the outlook is bright, I believe it's not for reasons having much to do with the accounting, auditing, tax, or consulting services traditionally provided by accounting firms. More on this soon ...
(Note: This posting draws on my joint research with co-authors, Matt Anderson and Greg Gerard, presently titled "Sarbanes-Oxley and the shrinking accounting labor market: Exploring potential causes and their implications".)
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