social network analysis of the audit industry in Taiwan
Date Issued
2008
Date
2008
Author(s)
Chen, Chien-Hui
Abstract
This study performs a social network analysis（SNA） to investigate the cohesion, power structure, and the role of leaders in Taiwan’s audit industry. The analysis is based on the dual-signer system for annual reports. Under this system, a company’s annual report must be co-signed by two auditors. We posit that this work relationship demonstrates that the two auditors influence each other formally and informally. Therefore, by analyzing the social network consisted of the auditors and their co-signing relationship, we can understand the cohesion and power structure of the big four accounting firms and identify the leaders of the audit industry. We find that the networks of PWC have the strongest cohesion, while DTT has the weakest cohesion. In addition, Deloitte and Touche seems not be able to consolidate the CPAs from the previous two firms since their merger in 2003. CPAs in the most central position of the networks are also high-level managers in D&T and EY. In the 2007 network of DTT and PWC, the groups who locate at the center of have clients with higher average sales revenues. However, KPMG and EY don’t have this phenomenon. The presidents of DTT and EY influence the organizations in an overall way in 2007. On the other hand, the president of PWC acts an important liaison between different groups. This study explores the structure of Taiwan’s audit industry and paves a path for further empirical study about the industry.
Subjects
social network analysis
big four accounting firms
dual-sighner system for annual reports
cohesion
power
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