Why are accounting firms all private? Just hit me today.
#deepthoughtsbyCFAvsMBA
It probably has to do with conflicts of interest. If other companies are your shareholders, you might be accused of being influenced when doing audits, etc. I suspect that it is the same with law firms.
^Yet BB’s can be public without issue?
Banks definitely have conflicts of interest. I think the difference is that banks need the economies of scale, so they are willing to pay up for compliance, oversight, audit, etc. Accounting firms are just a bunch of auditors - they don’t really rely on capital, credit, and other stuff that comes with being a big company. So, it’s easier to them to just be a private company and avoid unnecessary hassle.
This is my theory, anyway.
For audit firms, it is largely due to liability issues that these firms remain as partnerships. In a corporation, the senior executives maintain minimal liability when sh*t goes bad. OTOH, an audit partner has to think twice before doing anything unethical since he has real skin in the game (see Arthur Anderson). This helps to preserve the integrity of the financial statements.
Where’s my man Greenie?
Sorry, brother. I’ve often wondered the same thing myself. Why does EY have five thousand different offices that are all partnerships, but not a public C-Corp? Why can’t they be like Wal-Mart, and have different “stores” that all roll up into one giant entity? I hae no idea. Can’t answer. I got no help for you here.