MEASURING THE PRODUCTIVITY OF AUDIT FIRMS IN TÜRKIYE: A MALMQUIST INDEX APPROACH

This study evaluates the productivity of large audit firms in Türkiye conducting audits for Public Interest Entities (PIEs) between 2020 and 2023. Using Data Envelopment Analysis (DEA) to calculate the Malmquist Productivity Index (MPI), the research analyses total factor productivity (TFP) through efficiency and technological progress components. Data was collected from transparency reports and additional inquiries for 60 firms. Due to limited data disclosure, only the number of responsible auditors and partners were used as input variables, while audit and non-audit revenues served as outputs. Findings reveal a slight decline in TFP, driven by regression in technological progress despite improvements in efficiency. The "Big Four" firms outperformed others across all productivity metrics, benefiting from global expertise and technological investments. Local firms, which are not affiliated with any international network, faced challenges stemming from limited resources and slower adoption of technology, emphasizing the need for innovation and digitalization. By focusing on Türkiye’s unique economic conditions, including inflation, and employing a robust DEA-based approach, the study contributes to the limited literature on audit firm productivity in emerging markets. It provides actionable insights for enhancing competitiveness and addressing inefficiencies, offering strategies for aligning with global standards and adapting to evolving regulatory demands.