Supply of management advisory services from accounting practices: A model

Research indicates that businesses not employing internal accountants that receive management advisory services from external accountants achieve higher profit growth than those not receiving management advisory services. The objective of this paper is to present and test a model explaining why clients using an external accountant for statutory report presentation use management advisory services while other clients do not. A model was explained in terms of demand and supply for management advisory services. Personal characteristics of clients on the demand side and the characteristics of their external accounting practices on the supply side were examined in an ordinary least squares regression model. Strongest support was found for the hypothesis that use of management advisory services by clients is related to the communication skills of the accounting practices and their personnel. This is consistent with the view that accountants must market management advisory services and convince clients of the benefits of management advisory service