In this paper, we applied the agency theory and corporate governance theory to analyze the different organization types of accounting firms. There are increasing switches between the LLP and LLC of accounting firms. We are interested in the reasons why accounting firms made a such switch of organization types. We assumed that the switch organization types of accounting firms directly affect the accounting firms' company governance and business performance. We applied the cost-benefit perspectives of agency theory to analyze the economic benefit of switching organization types. We also used Wiseman and Gomez-Mejia’s behavior agency model to analyze the accounting company governance on risk-bearing and risk-taking. The financial data that we used to analyze the CPA firms are based on S&P Capital IQ. We concluded that the switch organization types of accounting firms directly affect the accounting firms' company governance and business performance. The switch of organization types increases business performance and decreases company governance from LLP to LLC. The switch will generate lower costs in operation and management and CPA firms are willing to become more risk-taking to issue modified audit opinions.

Xing Yin. The Analysis of Accounting Firms’ Organization Types and Reasons for Switching the Organization Types. Academic Journal of Business & Management (2023) Vol. 5, Issue 12: 77-81. https://doi.org/10.25236/AJBM.2023.051212.

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