• Service Diversification Strategy, Information Technology, and Accounting Firm Performance

Abstract

This study examines the direct and indirect effects of service diversification strategies on CPA firm’s performance. A total of 522 observations of 174 CPA firms in Taiwan provide panel data for the period from 2003-2005. The results of this study show a positive association between the balanced diversification strategies and firms’ performance for both sole proprietorship and partnership CPA firms. Furthermore, the impacts of both balanced related balanced diversification and unrelated balanced diversification strategies on performance remain unchanged. Finally, IT investments positively moderate the association between both related and unrelated balanced diversification strategies and partnership CPA firms’ performance, while IT investments negatively moderate the association between both related and unrelated balanced diversification strategies and sole proprietorship CPA firms’ performance. By investigating the management policies of the professional service firm, this study contributes to the diversification strategy literature and IT payoff research.

Keywords: Service balanced diversification strategy, Information technology,

Accounting firm performance