Role of Service Quality, Price, and Firm Image on Customer Satisfaction in Philippine Accounting Firms

Abstract

This study examines the service quality of accounting firms in Pampanga, Philippines, and their customers’ satisfaction. Using the SERVQUAL model, the study explores the effect of service quality, price, and firm image on client satisfaction of accounting firms. The study conducted a field survey questionnaire using convenience sampling and collected 59 client-firm responses. The findings suggest that accounting firm clients are satisfied with the services they receive from their respective providers. Regression analysis indicates that service quality significantly affects only customer satisfaction. Price has a significant effect on service quality. The duration a client stays with the firm and services provided to the client also significantly impact controlling service quality. Additional testing shows that service quality mediates the influence of service price on customer satisfaction. The findings guide accounting firms to improve their client service quality.

1. Introduction

Measuring service quality is imperative to accounting firms because higher levels of service quality are associated with higher customer satisfaction. Higher levels of customer satisfaction lead, in turn, to repeat business and ultimately to higher income levels. Professional services have distinct features requiring consideration at the nexus of service quality, price, service image, and customer satisfaction. Due to very minimal research and lack of primary data surrounding customer perceptions on the quality of services provided by accounting firms in Pampanga, Philippines, we were motivated to examine this inter-relationship. First, they play a vital role in business-to-business relations. In this relationship, professional firms hold a commanding position in knowledge and developing competitive advantage for their clients (Siahtiri 2017). Second, they engage in intensive interpersonal communication with clients. Third, professional service firms offer services that require high credibility from the delivery firm, given that clients have a lack of knowledge and expertise to evaluate their credibility (Sarapaivanich and Patterson 2016).

Concomitant with corporate scandals, the corporate image of accounting firms comes under challenge. Ethics are the cornerstone of an accounting firm’s practice in satisfying clients with quality expectations (Cameran et al. 2010). The accounting information is the core in service delivery to assist stakeholders in making better decisions. These embedded qualities are known as financial reporting quality. They are represented faithfully as unbiased, as comprehensive information that is, to the maximum extent, free of errors. Reporting firms can enhance the usefulness of information by making it comparable, verifiable, timely, and understandable (IFRS 2018). Early evidence showed that the close association of accruals with cash increases financial information quality (Hoang et al. 2017; Li et al. 2014). Later evidence has shown that financial reporting quality is comprehensively increased by accounting accruals quality, as well as information that has predictive capability, is persistent over periods, and contains future information otherwise known to insiders in the firm (Abeysekera et al. 2021).

The accounting profession has now mandated that financial and non-financial information coexist in reporting, thereby supporting each other. The management commentary presents non-financial information: it provides supplemental information about the financial statements (backward-looking information) and management plans for the future to attain strategic goals aligning with the vision (forward-looking information) (IFRS 2010). There is currently an exposure draft soliciting comments to improve the management commentary statement. The proposal recommends allowing firms to narrate their unique story about the reported financials and the future, using non-financial information while subjecting written information for audit (IFRS 2021).

The primary client-related services in an accounting practice firm are accounting, audit, and tax. It is the firm’s responsibility to ensure that the client receives high-quality accounting information. The essential audit quality is to provide reasonable assurance that financial statements are free of material misstatements and that the audit report communicates material misstatements. Conducting an audit requires challenging client firms’ estimates and accounting treatments that affect their reported financial statements. Upholding audit quality requires conducting the audit by following auditing standards and by an independent auditor in a position to make unbiased judgements (ASIC 2021). The primary stakeholder is the client.

The client and the taxation office are two inseparable stakeholders in providing tax services (Mustapha and Obid 2015). Tax service quality is about balancing the income generation for the government for development and tax client compliance with the taxation system. Three factors determine the taxation quality: responsiveness of both parties, informativeness, and reliability that client information processed for assessment is dependable and accurate (Parasuraman et al. 1988).

Professional services have distinct features requiring consideration in the nexus of service quality, price, service image, and customer satisfaction, which motivated us to examine this inter-relationship. First, they play a vital role in business-to-business relations. In this relationship, professional firms hold a commanding position in knowledge and developing competitive advantage for their clients (Siahtiri 2017). Second, they engage in intensive interpersonal communication with clients (Ng et al. 2016). Third, professional service firms offer services that require high credibility from the delivery firm given that clients have a lack of knowledge and expertise to evaluate their credibility (Sarapaivanich and Patterson 2015).

Under COVID-19 restrictions in the Philippines, two-thirds of businesses were temporarily closed and about 29 percent reduced their operations. Seventy-eight percent of the remaining firms operated at half capacity or less, with only 4 percent remaining in full operation (Asian Development Bank 2020). This newly normalised business environment has re-set the service quality, price, image, and customer satisfaction nexus during the COVID and post-recovery periods, which motivated us to undertake the study.

This study aims to measure the service quality using the SERQUAL scale (Parasuraman et al. 1988) among accounting service firms in Pampanga, Philippines, designed to determine how the firms’ customers assess their satisfaction with their services. It examines the relationship between the quality, price, and firm image nexus on customer satisfaction of accounting firms. Two similar studies conducted in Pakistan and Mauritius have different societal cultures. The Mauritius study examined the hotel sector (Hsu et al. 2006), and the Pakistan study examined the banking sector (Zameer et al. 2015). This study differs by reviewing the accounting professional practice firms which comprise knowledge-intensive high skilled that empower clients to develop competitive products and services (Cassidy and Nyadzayo 2019; Santos-Vijande et al. 2013). These professional services firms enable people across industry sectors to contribute crucial economic contributions.

It is reasonable to expect different strengths in the relationships of the service quality, price, firm image, nexus on customer satisfaction from a knowledge-intensive firm setting (Doloreux and Laperrière 2014). Additionally, the Philippines represent a different societal culture this study contributes to (Hofstede Insights 2021). Hence, this paper makes a vital contribution to understanding and appreciating the Philippines’ context.

The following section outlines the relevant literature. After that, the article presents the theoretical framework that underpins the hypothesis testing. The methodology section summarises the data collection and research methods. The results section reports the output obtained from empirical analysis, and the conclusions section provides an overview of the findings, research limitations, and ideas for future research.

2. Review of Literature

2.1. Service Quality

Central to all products of an accounting firm is service quality, which coexists with relationship quality and client loyalty. There must be strong relationship quality between client and firm, as well as client loyalty. As relationship quality increases, older clients are more loyal (Giovanis et al. 2015).

In contrast, more emotional customers evaluate service quality based on their satisfaction, i.e., the feeling of satisfaction comes first. Hence, customer satisfaction is a function of service quality evaluations of prior service encounters. Nevertheless, the general view in the service quality literature is that satisfaction is meeting the customer’s perception and expectations (Armstrong and Smith 1996; Oliver 1980; Parasuraman et al. 1988).

The research provides evidence that customer perceptions have been central to the management of service quality (Gronroos 1984; Parasuraman et al. 1988). Studies in professional services and accounting firm settings have emphasised the role of service quality in customer retention (Trasorras et al. 2009; Zaman et al. 2015). That service quality is relevant to the workings of professional service businesses, such as accounting firms (Zaman et al. 2015), only highlights the need for these firms to maximise this aspect and provide exceptional service to their clients (Saxby et al. 2003). It is more expensive to acquire new clients than to retain existing clients, and intense competition among professional services firms can lead to firms not being viable (Freeman and Dart 1993). Hence, firms must know and understand their clients’ needs to give them a better vantage point in anticipating clients’ requirements that need to be satisfied.

2.2. Price

Price is a measurement of quality for customers (Zeithaml 1988). Customers tend to use price to make general assumptions about what service quality to expect (Lichtenstein et al. 1993). Price also provides customers with information on whether they are obtaining positive or negative value on the service based on their expectations, which in turn affects their perception of service quality and level of satisfaction. The empirical evidence suggests that with increasing levels of customer satisfaction, clients become less sensitive to lower prices (Anderson 1996). Research has also shown that clients attribute high price levels with a better image, indirectly increasing their expectations (Bean et al. 1996).

The price is measurable in two ways—objectively (mechanistically) and subjectively (humanistically). The humanistic price is the perceived price. Since the study used a questionnaire to ascertain service quality, firm image, and customer satisfaction, these constructs also have humanistic value propositions. When clients think about the perceived quality, they use perceived monetary price. On the other hand, when the client thinks about the firm’s image, clients combine perceived financial and non-monetary prices. Given that price is not an objective phenomenon, the same client can take two mental price measures with service quality and firm image (Zeithaml 1988).

Professional accounting firms offer services that are intangibles. These intangibles comprise skills and expertise, and are a direct and easy way to increase short-term profits; it is not a sustainable strategy for professional services firms. These firms must invariably revert to a client value-led approach. Clients expect a minimum level of value. The profession must also follow a code of ethics. They must also consider the time involved in performing tasks. The propositions of value, ethics, and time are a triad that limits the success of a cost-led strategy. The only way to decrease the cost is to reduce the time to do tasks by getting help from technology (Metavonich and Cressman 2010). As professional firms offer various services, bundled services can also meet client needs and expectations. The firm has the advantage of increasing total profits from delivering a range of complementary services rather than single service delivery in a competitive market environment. It is advantageous for professional firms to unbundle prices by service items for transparency and thereby increase firm image (Tjan 2010; Mantovani 2013).

2.3. Firm Image

Firm image is vital in enhancing customers’ perceived value and satisfaction (Lai et al. 2009). A positive image facilitates customer retention and loyalty (Kandampully and Hui 2007). Indeed, the role of firm appearance imposes a halo effect on customer satisfaction, as it tends to create a bias in customers when they evaluate a firm’s service. A positive perception of the firm image also facilitates a positive service quality evaluation, leading to customer satisfaction. In contrast, a negative image perception limits a firm’s output (Lai et al. 2009). Trasorras et al. (2009) provided evidence that the firm image is directly related to customer retention as a component of value. The authors argue that a firm must carefully manage its public perception as a service provider and strive to achieve a positive image from its client base, which can be achieved by focusing on its expertise to maximise the efficiency and effectiveness of its products and services. Similar to these findings, Cameran et al. (2010) found that a corporate image of being an effective service provider in audit services settings was key in client satisfaction. Likewise, Bean et al. (1996) argued that given the strong effect of firm image on client expectations, accounting firms should aim to achieve a consistent level of service quality, which is key to managing the firm’s image.

2.4. Customer Satisfaction

Customer satisfaction is a factor to consider when exploring service quality. Although the two constructs are distinct (Oliver 1980), they are related (Parasuraman et al. 1988). Brady and Robertson (2001) described two schools of thought that discuss the link between the two constructs. The first school argues that cognitive evaluation precedes assessment, which influences behaviour—i.e., the appraisal of service quality results in emotional response (satisfaction or dissatisfaction), which influences behaviour. Meanwhile, the second school considers the service quality–customer satisfaction link as context-specific. Here, the causal order between the constructs depends on specific variables, such as the type of customer; for instance, a more objective (i.e., cognitive) customer will evaluate service quality first before assessing satisfaction.

2.5. The Nexus

Customer satisfaction, firm image, pricing, and service quality are interdependent constructs. Customer satisfaction can indicate organisational effectiveness. Effectiveness actualises when the firm is close to the ideal image—the firm has a purpose, is competent, critical, organised, underpriced, and compassionate (Cameran et al. 2010). The image can influence client loyalty to stay with the firm to receive services, coined as loyalty or client retention. Loyal clients are satisfied with the firm’s services. Service quality is about how much value addition took place for the client. Studies such as these have explored the complexities of interdependent relationships, focusing on developed economies. However, there are notable differences and uniqueness associated with professional accounting firms due to the code of ethics governing service delivery. Such understanding is mainly absent concerning an emerging economic setting.

3. Theoretical Framework and Hypotheses

3.1. Theory

The expectation (also known as expectancy-disconfirmation) theory of service quality and satisfaction serves as the underpinning theoretical perspective of this study (Expectation Theory 2000), as shown in Figure 1, positing that satisfaction is a function of expectation and perceptions of disconfirmation. Clients already have preconceived standards about the perceived performance of a product or service they will receive when purchasing. After usage, the client compares the level of performance or outcome against expectation, resulting in confirmation or disconfirmation. Confirmation happens when the perceived effect is at par with the expected outcome. On the other hand, disconfirmation produces a positive or negative gap or a discrepancy between expectations and perceptions. If the perceived result exceeds expectations (positive gap), there is positive disconfirmation. On the contrary, negative disconfirmation occurs when the perceived outcome is sub-par with the expectation level (negative gap). Thus, the effects of confirmation or disconfirmation determine satisfaction (Oliver 1980).

Figure 1. Conceptual framework relating service quality to customer satisfaction.

The notion of perception and expectancy underlies initial assessments of service quality evident in service quality models (Gronroos 1984; Parasuraman et al. 1985, 1988). These studies using service quality models have incorporated perceived service and expected service and discuss the role of each construct in their respective paradigms. The related models measure disconfirmation by benchmarking the service clients receive as expected and compare with the perceived services received.

3.2. Conceptual Service Quality Model

Measuring the service quality construct has been elusive but critically important for firms (Rosen et al. 2003). The SERVQUAL scale is a multidimensional measure that shares the same view regarding service quality perceptions and concludes that the degree and direction of the discrepancy between consumer perceptions and expectations provides information about the expectation gap (Parasuraman et al. 1988). Studies have viewed expectations as predictions or customers’ anticipated outcome of a service contact. They also considered that expectations are a customer’s desires, i.e., their beliefs of what the organisation ought to provide rather than what it can provide.

Given its prominence in service quality studies, we use the SERVQUAL scale (Parasuraman et al. 1988), which measures service quality in five dimensions: (i) Reliability—the ability to perform the promised service dependably and accurately; (ii) Responsiveness—the willingness to help customers and provide prompt service; (iii) Assurance—the knowledge and courtesy of employees and their ability to convey trust and confidence; (iv) Empathy—the caring and individualised attention provided to the customer; and (v) Tangibles—the physical aspects surrounding the service (i.e., facilities, the appearance of personnel, equipment). This study will utilise a modified version of the scale adapted from and used in a service quality and customer satisfaction study of Australia’s large regional accounting firm (Saxby et al. 2003).

3.3. Hypotheses

Given the importance of service quality management in the accounting industry (Azzari et al. 2020), the conceptual framework of this paper, as shown in Figure 1, assumes that customers evaluate the service quality in accounting firms based on their perception of the extent to which the firm’s service has met their expectations. As found from the SEVQUAL model, service quality comprises several attributes. Consequently, the difference between the lower customer’s expectation of service and higher customer perception with the service delivered results in negative disconfirmation (Bean et al. 1996; Ismail et al. 2006). Our first hypothesis thus becomes:

Hypothesis 1 (H1).

Service quality perceptions positively affect customer’s satisfaction.

Firms can generally influence the disconfirmation gap by adjusting actual performance to meet customers’ expectations (Gronroos 1984). From a consumer’s perspective, it makes sense for them to expect that a firm’s pricing should be reasonable—i.e., the level of quality received by customers should be proportional to the cost they paid. For example, in the healthcare industry, price is an effective intervention to promote behavioural strategies of making decisions about services. Specific prices impress certain customer quality expectations (Lai et al. 2020). We expect similar behaviour in the accounting firm as to how clients evaluate the service, leading to our second hypothesis:

Hypothesis 2 (H2).

Perceptions of a firm’s price affect perceived service quality.

Accounting services comprise skills, expertise, and ethics. The value of service influences the price (Metavonich and Cressman 2010). Price is a construct that initiates the client to buy the service or not. The disconfirmation follows after purchasing the service (Haq 2018). Perceptions of the firm’s pricing may exert a separate effect on customer satisfaction. Regardless of the firm’s service quality, its pricing may decide whether customers will not only purchase but later repurchase the service, where satisfaction is a primary determinant. Thus, the third hypothesis becomes:

Hypothesis 3 (H3).

Perceptions of a firm’s price positively affect customer satisfaction.

Firm image is an essential factor affecting customer satisfaction. Given that organisational image arises from client-firm interaction, it implies that the most apparent manifestation of a firm’s image is the service itself for firms in the service industry. The firm image mainly positively influences service quality perceptions (Razavi et al. 2012). We posit that organisational image can separately affect customer satisfaction. A positive image of the firm can reduce the affective impact of unsatisfactory service, i.e., a customer may change their evaluation of a firm’s service depending on their perceived image of the firm. Hence, our final null hypothesis:

Hypothesis 4 (H4).

Perceptions of a firm’s image positively affect customer satisfaction.

Studies revealed that price, firm image, and service quality are directly related to customer satisfaction (Razavi et al. 2012). The firm’s image is necessary for enhancing customers’ perceived value and satisfaction. In the service industry, a positive image facilitates customer retention and loyalty. On the other hand, the sales price is a quality signal. Customers tend to use price to make general assumptions about a service. Measuring service quality is essential to accounting firms because higher levels of service quality are associated with higher customer satisfaction. Thus, accounting firms should be concerned with maximising service quality. Customer satisfaction among businesses in the service sector bears great importance. Accounting service businesses need to know their customers’ satisfaction levels by conducting regular satisfaction surveys. Measuring customer satisfaction gives a sign of how an organisation is performing services. Customer loyalty arising from customer satisfaction is vital for any organisation that depends on repeat business. Hence, those in the accounting service sector must measure customer satisfaction and sustain or improve this satisfaction.

Good service quality will lead customers who have prior experience to generate a positive image of the company, resulting in favourable preference. The corporate image represents the operational capabilities and competitive advantage of a company. The bright firm image generated attracts new customers (Faria and Mendes 2013). Recipients consider product and service quality when evaluating a company image. It is easier to appease customers. They will be more willing to accept the company’s services and buy its products (Hsu et al. 2006).

The more quality the service has, the better the company’s image will be perceived (Bean et al. 1996). On the other hand, the better the company has, the perception of quality will be higher. Thus, it is crucial to consider the service provider image as a mediator of the relationship between the perception of functional/technical quality and overall service quality (Fleischman et al. 2017).

Hypothesis 5 (H5).

Firm image positively affects service quality.

The mediating variable, namely, service quality, is proven to indirectly mediate the effect of price and sales promotion on customer satisfaction. Research has shown that the variables price and sales promotion significantly increase customer satisfaction and service quality, which is the mediating variable. Service quality indirectly or partially mediates the effect of price on customer satisfaction (Gani and Oroh 2021; Prasilowati et al. 2021). Based on this evidence, we state that product quality has a significant positive effect on customer satisfaction as well as price.

Hypothesis 6 (H6).

Service quality dimensions positively mediate the relationship between price and customer satisfaction.

4. Methodology

4.1. Geographic Location

This study selected Pampanga province, Philippines, because it typifies the business environment most familiar to accounting firms in the Philippines. Pampanga occupies the south-central region of Luzon province with a landmass of 796 square kilometres. Its capital city is San Fernando, and Angeles and Mabalacat are two other major cities (Wikipedia 2021).

4.2. Participants and Sampling

Snowball sampling technique with the assistance of: (1) registered accounting firms in Pampanga, Philippines, which willingly participated in the study; and (2) personal networks of the researchers, who have connections with business establishments that employ the services of accounting firms in Pampanga. The data collected are comprised of clients of accounting firms in Pampanga, Philippines. The study used the non-random sampling method as an exploratory study first conducted in the Philippines to examine the research aims. The study used the URL of the questionnaire to distribute it to the accounting firms via e-mail, and they then circulated it to their clients. The survey resulted in 59 client responses provided by 19 Accounting service firms in Pampanga.

4.3. Instrument

This study used a modified version of the questionnaire previously used in published research (Saxby et al. 2003). The survey instrument comprised five parts corresponding to the four measured variables of the study and a section to capture the respondents’ characteristics. The study measured each variable as a formative construct through the questionnaire.

• Demographic profile of respondents and business establishments;
• Client perception of service quality measure: A 22-item SERVQUAL scale, to capture the perceived service quality of the accounting firm serving the establishment. The study adopted SERVQUAL from Saxby et al. (2003);
• Client perception of price measure: Due to the assumption that customers associate price with quality, we used a modified scale of the price-quality schema (Lichtenstein et al. 1993) to measure respondents’ perception of the accounting firms’ pricing;
• Client perception of firm image measure: A scale for respondents’ perception of the accounting firm’s image of its product and services, adopted from the Reputation QuotientSM of Fombrun et al. (2000); and
• Client perception of customer satisfaction measure: A five-item scale to capture the respondents’ satisfaction with the accounting firm’s services, adapted from Saxby et al. (2003).

Each scale item was measured and evaluated using a five-point Likert-type scale, as described in Table 1.

Table 1. Rating Scale.

	Value	Range
Extremely satisfied	5	4.5–5
Very satisfied	4	3.5–4.49
Neutral	3	2.5–3.49
Slightly satisfied	2	1.5–2.49
Not at all satisfied	1	1–1.49

The reliability testing using Cronbach’s α showed acceptable results, as all individual scales returned alpha coefficients beyond 0.80, while the entire questionnaire returned an alpha coefficient of 0.986. Table 2 presents the results of the reliability testing.

Table 2. Results of Reliability Testing Using Cronbach’s α.

Scale	Cronbach’s Alpha
Service Quality	0.981
Responsiveness	0.942
Assurance	0.920
Empathy	0.928
Tangibles	0.880
Reliability	0.925
Price	0.849
Image	0.917
Customer Satisfaction	0.961
Entire Questionnaire	0.986

4.4. Data Collection

The study collected data through a Web-based questionnaire administered using Google Forms. The accounting firms received the URL distributed to them via e-mail, and distributed it to their clients.

4.5. Data Analysis

The study used the statistical program Jamovi (v1.0.7) to organise and analyse the data. Descriptive statistics measured respondents’ perception scores and profile descriptions and frequencies. The regression analysis measured and described variable effects using three models to test the hypotheses.

4.6. Ethical Considerations

The first part of the questionnaire was a cover letter explaining the nature and importance of the research. The letter assured respondents about the confidentiality of their responses and their identity, and that the results of the study would be used strictly for academic purposes. Should they request a copy of the research, the study agreed to send a copy of the completed research findings.

5. Results

5.1. Descriptive Statistics

A total of 59 responses (sample size), composed of clients from the 19 Accounting service firms in Pampanga, Philippines, took part in the survey. The study period was from 30 December 2020 to 18 January 2021.

Among the respondents, one (1) was unwilling to participate, while two (2) were not making using accounting firm services, bringing the total usable responses to 56. Table 3 shows the mean scores of the service quality dimensions and the study variables. Among the study variables, customer satisfaction garnered the highest mean rating at 4.34, while price had the lowest mean rating at 3.93.

Table 3. Mean Ratings of Service Quality Dimensions and Study Variables.

Scale	Mean	Std. Deviation	Description
Service Quality	4.23	0.642	Very satisfied
Responsiveness	4.20	0.729	Very satisfied
Assurance	4.40	0.616	Very satisfied
Empathy	4.21	0.672	Very satisfied
Tangibles	4.09	0.649	Very satisfied
Reliability	4.24	0.700	Very satisfied
Customer Satisfaction	4.34	0.719	Very satisfied
Price	3.93	0.792	Very satisfied
Image	4.17	0.682	Very satisfied

The firm image had a mean rating of 4.17. Notably, among the service quality dimensions, assurance was rated the highest at 4.4, followed by reliability at 4.24, empathy at 4.21, responsiveness at 4.20, and tangibles at 4.09.

5.2. Regression Analysis of Model 1 Results: Hypothesis 1, 3, and 4

As shown in Table 4, the results indicated that the model was significant, and explained 93.1% of the variance (R2 = 0.931, F(7,48) = 92.9, p < 0.001).

Table 4. Summary of Regression Estimates and t-test Results for Model 1for Service quality → Customer Satisfaction Model.

Predictor	Estimate	Std Error	t	p-Value
Intercept	−0.6557	0.2355	−2.784	0.008 *
Price	0.0386	0.055	0.702	0.486
Firm image	−0.0275	0.1348	−0.204	0.839
Compared to service reference group 0–5 years
6–10 years	0.1063	0.0658	1.615	0.113
11–15 years	0.2301	0.0988	2.33	0.024 *
16–20 years	−0.1023	0.1078	−0.949	0.348
More than 21 years	0.1063	0.0658	1.615	0.113

* means significant.

As shown in Table 4, among the independent variables, only service quality (β = 1.111, p < 0.001) significantly predicted customer satisfaction. The results support H1 that service quality influences customer satisfaction. Price was not a significant predictor of customer satisfaction, did not support H3. Firm image was also not a significant predictor of customer satisfaction, and did not support H4.

The service quality had five dimensions: Responsiveness, Assurance, Empathy, Reliability, and Tangibles. When the service quality dimensions were isolated as dependent variables, only assurance (β = 0.386, p = 0.005), empathy (β = 0.293, p = 0.042), and reliability (β = 0.397, p = 0.006) significantly predicted customer satisfaction.

The price had no significant influence on service quality. The customers who were with the firm for 11 to 15 years had a significant effect on service quality. The result indicates that customers appreciate service quality after ten years, and after 15 years, that appreciation diminishes.

The firm image does not significantly influence customer satisfaction, and findings do not support H4. However, the results are consistent with the previous literature showing that firm image has no relationship to customer satisfaction because clients have witnessed reputable accounting firms involved with corporate collapses (Metavonich and Cressman 2010).

5.3. Regression Analysis of Model 2 Results: Hypothesis 2, and 5

We also conducted a regression analysis to test H2, which posits that price affects service quality. The results support H3, and indicate that the model is also significant, explaining 62.4% of the variance (R2 = 0.624, F(5,50) = 16.6, p < 0.001).

Table 5 shows the model fit measures of the analysis of the influence of price on different service quality dimensions. The results indicate that price (β = 0.495, p < 0.001) significantly predicts service quality, which supports H2 and is consistent with Lichtenstein et al. (1993) and Zeithaml (1988). They posit that clients utilise price as an indicator of service quality. Hence, this implies that the price of the service of accounting firms in Pampanga, Philippines, is proportional to the quality of the service they deliver.

Table 5. Summary of Regression Estimates and t-test Results for Model 2 Price → Service Quality Model.

Predictor	Estimate	Std Error	t	p-Value
Intercept	2.438	0.31	7.862	<0.001 *
Price	0.495	0.0769	6.411	<0.001 *
Compared to service reference group 0–5 years
6–10 years	−0.386	0.1271	−3.04	0.004 *
11–15 years	−0.169	0.2029	−0.834	0.408
16–20 years	0.133	0.2239	0.595	0.555
More than 21 years	−0.931	0.3211	−3.04	0.004 *

* means statistically significant.

How long respondents have received accounting firm services significantly and negatively affected service quality, but only for those who have received such services for 6 to 10 years compared to those who received services for 0 to 5 years (β = −0.386, p = 0.004). The study compared the impact for those who have received services for more than 21 years to the reference group of 0 to 5 years (β = −0.931, p = 0.006). Table 5 shows a summary of the results.

Table 6 shows results of the influence of firm image on service quality, and found that firm image did not significantly influence service quality. The results did not support H5.

Table 6. Summary of Regression Estimates and t-test Results for Model 1 for Price → Service Quality Model.

Predictor	Estimate	Std Error	t	p-Value
Intercept	−0.55076	0.2286	−2.4098	0.02
Price	0.03715	0.05666	0.657	0.514
Firm image	−0.00468	0.1258	−00372	0.97
Service quality	1.11086	0.1288	8.6277	<0.001 *
Compared to service reference group 0–5 years
6–10 years	0.114	0.0675	1.6885	0.098
11–15 years	0.28602	0.0997	2.8676	0.006 *
16–20 years	−0.10314	0.1111	−0.9282	0.358
More than 21 years	0.42202	0.1726	2.4456	0.018 *

* means significant.

5.4. Mediating Effect and Path Estimation of Service Quality on the Relationship between Price and Customer Satisfaction (That Is, on Hypothesis 6)

Given the significant effect of price on service quality and customer satisfaction, we examined whether service quality has a mediating role between price and customer satisfaction. Results show that service quality fully mediates the effect of price on customer satisfaction (β = 0.573, t = 6.71, p < 0.001). Table 7 shows the mediation estimates, while Table 8 shows the path estimates.

Table 7. Mediation Estimates of Service Quality on Price and Customer Satisfaction.

Effect	Label	Estimate	Std Error	Lower	Upper	Z	p
Price to Service quality	a	0.5706	0.0771	0.4196	0.722	7.4	<0.001 *
Service quality to Customer satisfaction	b	1.0047	0.0636	0.8804	1.129	15.85	<0.001 *
Price to Customer satisfaction	c	0.0596	0.0514	−0.0312	0.17	1.35	0.176

* Means significant.

Table 8. Path Estimates for the Effect of Service Quality on Price and Customer Satisfaction.

Effect	Label	Estimate	Std Error	Z Value	p Value
SERVICE QUALITY
Indirect	a × b	0.5733	0.0855	6.71	<0.001 *
Direct	c	0.0696	0.0514	1.35	0.176
Total	c + a × b	0.6429	0.0856	7.51	<0.001 *

* Means significant.

These results show that service quality plays a crucial role in customer satisfaction. Clients encounter price, service quality, and customer satisfaction in real-life situations. A client experiences service quality after entering into the service contract or not. The full mediation indicates that the client trusts the accounting firm on service quality. Therefore, service quality plays an essential role in positive or negative disconfirmation after service delivery. These findings support the expectation (expectancy-disconfirmation) theory.

We also analysed to determine if specific individual service quality dimensions play a mediating role between price and customer satisfaction. Interestingly, the results show that by itself, each service quality dimension only exerts a partial mediating effect between price and customer satisfaction (p < 0.05). Table 9 shows the mediation estimates of the analysis.

Table 9. Mediation Estimates of Service Quality Dimensions on Price and Customer Satisfaction.

Effect		Label	Estimate	Std Error	Lower	Upper	Z	p	% Mediation
RESPONSIVENESS	Indirect	a × b	0.425	0.018	0.2668	0.584	5.26	<0.001	66.1
	Direct	c	0.218	0.07	0.0804	0.355	3.11	0.002	33.9
	Total	c + a × b	0.643	0.086	0.4751	0.811	7.51	<0.001	100
ASSURANCE	Indirect	a × b	0.503	0.084	0.3394	0.667	6.02	<0.001	78.3
	Direct	c	0.14	0.056	0.0306	0.248	2.51	0.012	21.7
	Total	c + a × b	0.643	0.086	0.4751	0.811	7.51	<0.001	100
EMPATHY	Indirect	a × b	0.512	0.084	0.3466	0.676	6.08	<0.001	79.6
	Direct	c	0.131	0.061	0.0126	0.25	2.17	0.03	20.4
	Total	c + a × b	0.643	0.086	0.4751	0.811	7.51	<0.001	70
TANGIBLES	Indirect	a × b	0.45	0.083	0.288	0.612	5.44	<0.001	70
	Direct	c	0.193	0.075	0.0463	0.339	2.58	0.01	30
	Total	c + a × b	0.643	0.086	0.4851	0.811	7.31	<0.001	100
RELIABILITY	Indirect	a × b	0.518	0.084	0.35321	0.684	6.15	<0.001	80.6
	Direct	c	0.125	0.059	0.00893	0.24	2.11	0.035	19.4
	Total	c + a × b	0.643	0.086	0.47509	0.811	7.51	<0.00	100

Service quality dimensions’ mediation effects significantly influence the price and customer satisfaction relationship. The results show that accounting firms must consciously pay attention to all measurements of service quality to increase client satisfaction.

6. Conclusions

The mean ratings suggest that generally, the respondents were very satisfied with the overall service quality and service quality dimensions ($\overline{\mathrm{x}}$ > 4.00) of the accounting firms in Pampanga, Philippines. Stated differently, this suggests that accounting firms in Pampanga provide quality accounting-related services to their clients. The high ratings obtained by the assurance and reliability dimensions imply that clients view their accounting firms as knowledgeable and up-to-date with the current and relevant accounting principles, regulations, and standards. Clients can depend on the information and advice provided by their accountants, which significantly affects their satisfaction. These results are consistent with the study by Saxby et al. (2003). Their work showed that assurance and reliability make accountants unique from other professional fields. Fontaine et al. (2013) found that audit firms must have and demonstrate technical proficiency in relevant accounting matters. Ismail et al. (2006) revealed that reliability and assurance were the most critical dimensions for audit firms.

In contrast with Saxby et al. (2003), the empathy dimension garnered a high rating and significantly affected customer satisfaction with accounting firms in Pampanga, Philippines. This suggests that aside from being knowledgeable and dependable, accounting firms in Pampanga are empathetic and client-oriented. They are caring and provide individualised attention to their clients, consistent with the findings of Zaman et al. (2015) that clients will choose more emphatic accounting service providers. That the empathy feature may be due to a normative effect, such as Filipino values, warrants further investigation.

The study found a lack of significant effects of price and firm image on customer satisfaction, contrary to Lai et al. (2009), who viewed corporate image as having an essential role in building customer satisfaction, which results in customer satisfaction loyalty. This contrast in the effect of firm image may be due to a difference in measurement, as we employed a scale that focuses on client perceptions of the image of the accounting firm’s services rather than the reputational image of the firm itself and its image concerning other firms. Likewise, the insignificance of the effect of price on customer satisfaction may also be due to the use of a different scale, which links price to quality. However, these findings provide insights that customers of accounting firms in Pampanga, Philippines, value the quality of accounting firm services more than their pricing and image.

The time the respondents have received accounting services exerts interesting effects on customer satisfaction and service quality. First, compared with those receiving the services for 0 to 5 years, the results suggest that service quality perceptions significantly increase once the service relationship has reached 11 to 15 years. This magnitude doubles when it reaches more than 21 years. This is comparable with the findings of Cameran et al. (2010) that auditor tenure is related to higher customer satisfaction. However, there is a caveat that long-term service may lead to conflict of interest, as it might eliminate the professional scepticism required on the part of an accounting firm (Code of Ethics for Professional Accountants) to implement and enforce accounting standards and regulations properly. As found here, Zaman et al. (2015) also suggests further study on the effect of client retention and firm’s ethics. Another intriguing effect of accounting service length is its role in the relationship of price and service quality. Compared to those receiving the service for 0 to 5 years, the results suggest that price negatively affects service quality when the service relationship reaches 6 to 10 years. Still, the magnitude decreases when the relationship reaches more than 21 years. Given the present data, it is premature to speculate possible causes for such effects, primarily since the study was conducted during an unprecedented circumstance (i.e., during the COVID-19 pandemic). Nonetheless, the existence of such dynamics suggests that there may be other unidentified factors of service quality in accounting firms in emerging economies that warrant further study.

Implications for accounting firms: Given the competitive nature of the accounting industry, accounting firms must recognise the importance of service quality as a strategic goal. Maximising service quality should lead to higher levels of client satisfaction. Satisfaction can lead to client retention and increase income without spending money on new client acquisition (Saxby et al. 2003). Thus, we found it necessary to assess service quality as a vital feature of accounting services if firms are to survive and grow in their environment. Using a survey questionnaire, we explored the relationship of service quality, price, the firm’s image, and customer satisfaction of accounting firms in Pampanga, Philippines, which are measured based on the perceptions of their clients.

The crucial intangible service quality is an asset that accounting firms must learn to codify in documents, and methodological approaches to clients to leverage such knowledge to advantage. Given accounting firms are heavily dependent on technically skilled people, they can move exit a firm with implicit service quality knowledge, unless such knowledge is captured for future use to satisfy clients by other staff members in the accounting firm (Abeysekera 2021).

Implications for theoretical understanding: The results support the expectation theory in that in the Philippines context, service delivery plays a crucial role in positive disconfirmation. The findings also show that service delivery must evaluate considering the price of client services and customer satisfaction. Although this study does not provide sufficient evidence, there is a possibility to have tiers of service delivery that correspond with different price levels and customer satisfaction. For example, an accounting firm may charge a higher price and the client then expects higher service quality towards client satisfaction.

Policy implications: Accounting practices deliver services on value propositions. To satisfy clients, clients must receive the valued knowledge and expertise of accountants for the price they charge. In a business context, there are also possibilities of value compromises. These include conspiring with the client to agree on suspicious transactions as correct and passing financial statements with modifications. These practices and resulting outcomes can undermine the value of service quality and undermine the value of the accounting profession. Therefore, the local accounting institutions must continually conduct compliance audits on accounting practices to show best practices of client service quality.

Limitations of the study and future research: This is the first study that has examined the price-quality-image-customer satisfaction nexus contributing evidential knowledge about professional accounting firms in the Philippines. The findings contribute to the much needed theoretical and practical insights. However, the geographic location of the study is only one province in the Philippines. The sample size is small and used snowball sampling technique to collect data. These three factors can limit the robustness and generalising results. However, the study has delivered theoretically valid findings that require further testing with larger samples and widespread geographies. The various countries’ societal cultures and social and economic environments can also influence the price–service quality–client satisfaction interrelationship. A deeper and broader understanding of future research can provide validated findings to advance accounting.