Accounting firm partners to public corporation employees: An exploration of implications and responses in a failed accounting company

Partners of accounting and other professional service firms selling their firms to publicly owned companies often remain with the acquiring company as employees and receive company shares as consideration for their firms. Agency theory suggests public ownership will result in changes to the roles of senior professionals with potential resistance and motivation consequences. This paper explores the implications on former accounting firm partners of becoming employees of a publicly traded accounting corporation, the responses of the former partners and impacts on the acquiring company. This paper uses a case study approach involving the review of publicly available information and interviews with executives and senior professionals of an Australian publicly owned accounting company, Stockford Limited. The Stockford case indicates that selling their firm to a publicly owned company can have significant negative implications for accounting firm partners. The former partners struggled to adapt to their new roles as senior professional employees and shareholders. Their responses had significant impacts on company performance ultimately contributing to the collapse of the company reflecting the power senior professionals retain regardless of the change of ownership form. Care is required generalising findings of a single case to other professions and other geographic jurisdictions. This paper has significant implications for entrepreneurs and executives consolidating professional service firms, partners considering selling their firms and investors in publicly traded professional service companies. Despite the emergence of publicly owned accounting and other professional service companies and the importance and power of senior professionals in professional service firms, this is the first study to explore the implications for senior professionals of selling their firms to public companies.