Impact of Information Technology on Essay

8099 Words Apr 4th, 2012 33 Pages
Journal of Information Systems
Vol. 16, No. 2
Fall 2002 pp. 209–222

Impact of Information Technology on
Public Accounting Firm Productivity
Rajiv D. Banker
Hsihui Chang
The University of Texas at Dallas
Yi-ching Kao
University of Wisconsin–Milwaukee
ABSTRACT: In recent years, information technology (IT) has played a critical role in the services provided by the public accounting industry. However, no empirical research has evaluated the impact of IT on public accounting firms. This study focuses on five offices of an international public accounting firm that recently made large IT investments, primarily in audit software and knowledge-sharing applications. Both qualitative and quantitative information from the research
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With rapid advances in IT, numerous articles have appeared in practitioner-oriented accounting journals that discuss how to invest in IT to keep up with the current technology (Smith 1997; Zarowin
1998). To justify an IT investment, managers need to understand the potential benefits resulting from the investment. Although there is a general perception that IT investments by public accounting firms can improve firms’ productivity (Lee and Arentzoff 1991), the impact of IT on firm performance is not directly observable. Public accounting firms need to understand how the technology can transform their work and whether such transformation will ultimately lead to productivity gain. While the recent IT research literature documents a positive marginal contribution of incremental IT expenditure using cross-sectional



Journal of Information Systems, Fall 2002

analysis across several firms (e.g., Brynjolfsson and Hitt 1995; Lichtenberg 1995), empirical evidence at the firm level has not been reported. Longitudinal analysis before and after IT implementation is important to support a causality argument leading from IT deployment to improvement in the firm’s productivity. This is especially of interest in a public accounting firm where

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