Financializing the Professions: The Rise of Private Equity in Accounting / Inna Abramova, John M. Barrios.

Format:

Book

Author/Creator:

Abramova, Inna.

Contributor:

Barrios, John M.

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w34575.

NBER working paper series no. w34575

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2025.

Summary:

Private equity (PE) has moved rapidly into professional services, yet its impact on accounting, where licensing regimes, reputational capital, and partnership governance traditionally limit external ownership, remains poorly understood. We examine how PE ownership alters the organization and market structure of accounting firms using data from 1999-2024 that link more than 3,600 PE transactions to detailed information on mergers and acquisitions (M&A), labor markets, and audit pricing. PE investment increases sharply after 2020 and extends to both CPA-licensed audit firms and non-CPA advisory practices, with most activity in large mid-tier PCAOB-registered firms. After PE entry, firms grow faster: non-audit revenues rise, employment expands, and cross-state M&A accelerates, consistent with platform-building and consolidation. These adjustments have market-level implications. PE investment raises labor-market concentration in key accounting occupations and drives up ERISA audit fees in a standardized setting, as confirmed by a synthetic difference-in-differences design. Our results reveal a key tension at the core of professions: preserving independence and competition in a market increasingly driven by financial capital.

Notes:

December 2025.

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