A Research Of Partner’s Benefit Distribution In Accounting Firms

After more than30years of expansion and development, China’s CPA professionhas achieved great success. At present, China not only introduced some internationalaccounting firms, but also developed a batch of high quality, good brand local CPAfirm. Therefore，the gap between China’s local accounting firms and big4has beennarrowed.In order to make China’s public accountants industry stronger and moreinternational, CICPA launches the work about constructing CPA firms’ internalgovernance. As one of the most important internal governance system, partner profitsharing mechanism can motivate partners directly. However the partner’sremuneration is private, theoretical research and empirical study on this problem isnot enough.There are three basis about profit sharing, including the percentage of ownership,Equal-sharing and performance evaluation. From the development process ofdomestic firms, many firms come from deregulation reform, so the formation of thepartner has a specific history background. At present，most of domestic firms’ profitdistribution are based on the percentage of ownership, it doesn’t conform to thefirm’s human capital intensive characteristic. Therefore, some scholars give highappraisal on the method according to the current performance, because of its bettermotivation. However, according to the marginal contribution distribution of benefitsonly serve as short-term incentives, then the firm should adopt the method which canconform partners’ individual interests with the firm’s long-term interests.Based on the review of present research situation, from the human capitalproperty rights theory, life cycle of human capital, intergenerational goods, humancapital portfolio theory perspective, this paper firstly analyzes the rationality aboutseniority system. At the same time, according to agency theory, marginal contributiondistribution of benefits can avoid shirking, grabbing, and the departure of partner.Secondly, this paper expounds three basic methods about profit sharing and five casesabout partner benefit allocation. Then, this article also discuss the interest allocationmechanism about partners’ admittance and exit. Finally, by investigating partnerinterests allocation in six domestic accounting firm, we can obtain more understanding about the problem deeply.This paper argues that accounting firms should consider the partner’s senioritybesides marginal performance method, which can form the mortgage mechanism andpromote intergenerational inheritance.