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Accounting Scholarship as an Avocation Shyam Sunder Yale University Accounting Doctoral Students Association Annual Conference Chicago, August 3-5, 2007.

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Presentation on theme: "Accounting Scholarship as an Avocation Shyam Sunder Yale University Accounting Doctoral Students Association Annual Conference Chicago, August 3-5, 2007."— Presentation transcript:

1 Accounting Scholarship as an Avocation Shyam Sunder Yale University Accounting Doctoral Students Association Annual Conference Chicago, August 3-5, 2007

2 Two roads diverged in a wood, and I— I took the one less traveled by, And that has made all the difference. Robert Frost, The Road Not Taken

3 An Overview State of doctoral education in accounting: a survey What I got from the doctoral education What do we do? Posing a research question AAA, Imagination and Chicago meetings

4 Welcome to the Life of Scholarship Not many young people find a life of scholarship to be an exciting prospect I think it is because they do not know and have never been exposed to its rewards The average age of AAA membership is 54.3 years Most other countries of the world have the same problem

5 Survey of Students in 2007 AAA Doctoral Consortium What factor influenced you the most to pursue a PhD in Accounting? (126 Responses) –PhD Project (11.1%) –Family influence(6.3%) –Lifestyle(31.7%) –Professor influence(32.5%) –Other: (please specify) (18.3%) Interest in research; intellectual satisfaction; long-term career aspirations; always wanted to be an accountant; PT program (eve); interested in teaching; desire to contribute to field.

6 Survey 2 How long did you consider entering a PhD program before applying? (110 Responses) –Under 1 year(25.5%) –1-2 years(29.1%) –3-4 years(26.4%) –5-6 years(10%) –7+ years(9.1%)

7 Survey 3 What were the factors that contributed to your selection of a particular university? (149 Responses) –Significant number of active research faculty to work with and be committee members and/or chair?(37.6%) –Access to databases(3.4%) –Stipend package(13.4%) –Ranking(19.5%) –Other(26.2%) Although most respondents did provided details here, of the 14 that did – 11 indicated location/proximity was key. The other responses were reputation/quality of school, PT program.

8 Survey 4 What was the expectation of the number of years it would take to complete the PhD program at the time you entered the program? (110 Responses) –3-4 years(12.7%) –4-5 years(81.8%) –5-6 years(4.5%) –6 +(.9 %) What is the actual number of years it will take you to complete the program? (102 Responses) –3-4 years (2%) –4-5 years (35.3%) –5-6 years (57.8%) –7+ years (4.9%)

9 Survey 5 If you receive an annual stipend to teach during your studies, how much do you receive? (108 Responses) –Under $10,000 (7.4%) –$10,000 - $15,000 (20.4%) –$15,001 - $20,000(39.8%) –$20,001 - $25,000(15.7%) –$25,001 - $30,000(7.4%) –$30,001 - $35,000(1.9%) –$35,001 - $40,000(0%) –$40,001 - $45,000(0%) –$45,001 - $50,000(0%) –Over $50,000(.9%) –Did not receive a stipend (Skip to Question #20) (6.5%)

10 Survey 6 Do you anticipate that your starting salary as a professor will equal your expectations of that salary when you started your PhD program? (108 Responses) –Yes – Same (56.5%)b. No – Higher (38.9%)c. No – Lower (4.6%) Today, what base salary range do you expect to earn when you graduate? (113 Responses) –Under $50,000 (.9%) –$50,000 - $75,000(2.7%) –$76,000 - $100,000(7.1%) –$101,000 - $125,000(31.9%) –$126,000 - $150,000(37.2%) –$151, $175,000(14.2%) –Over $175,000(6.2%)

11 Survey 7 Please rank (1 being the highest) the following categories (not all- inclusive), which are possible areas of focus to help address the PhD shortage issue: #5 Improved access to research data #2 Building pipeline (to attract more students to PhD programs) #3 Creating additional slots in accounting PhD programs for new students #1 Financial scholarships/support for PhD students #6 Length of PhD programs #4 More focus by Deans/school leadership on issue. #7 Public accounting internships for professors. #8 Accreditation policies. Other:

12 Survey 8 Advertising the lifestyle more: Don't think many accountants know about the opportunities (lifestyle, salary, etc). I don't think it ever really crosses their mind. More advertisement. Most PhD students choose this because of lifestyle (family). Maybe this should be more advertised. Some people I worked with in public accounting expressed interest in the idea, but I think needed more info. Building a good network between auditors & faculty/PhD students will help the shortage as more info is exchanged. More than any of the above, I think it is a mindset. Check out BYU's pipeline…

13 Survey 9 Research: Reduce # of schools seeking to be research schools. Focus on industry & interdisciplinary research motivates young academia. Lack of student exposure to accounting research. People outside PhD programs don't understand what accounting research is. Making accounting research more relevant to the accounting profession. It is my fear that much of the research currently being conducted is too math intensive and often loses sight of the accounting question at hand. Moreover, it is my observation that professionally trained accountants are shying away from the academic profession as it is being over-run by those who have undergraduate degrees in math who then apply those skills to an issue that has little relevance or application to the classroom of business for that matter

14 Survey 10 Pre-Requisite Coursework: Reduce pre-requisite coursework. (i.e., even though I have a MAcc, I had to retake 5 foundation courses in Accounting, Marketing, Information Systems and Economics, which adds at least 1+ semester to program.) Salary: Improve prospects for tenured accountants to make good $$. Hard to leave (career) to make less, especially with family to support. Outside options to strong candidates make $$ of a PhD/academic career very significant. Recognize that obtaining a PhD is a VERY tough decision for many qualified candidates to make. Giving up an excellent job/salary to live as a poor student.

15 Salt Lake City, 1972 There are interesting questions I had never thought about There are ways of looking at the same phenomena that never occurred to me There are ways of finding answers to questions I did not even know about Research is not a production process (and the labor theory of value does not apply) Each of us is both an essential as well as the weakest link in our research

16 Life of the Mind To explore ideas new to you To develop explanations that may not have occurred to you Find ways of sorting ideas and explanations: –By logical consistency –By empirical validity –By boundaries of generalizability Cooperate with your colleagues and the faculty Establish intellectual links with your cohort Keep and open mind but listen critically Don’t be afraid to challenge or disagree but not just for the sake of disagreeing

17 Welfare of Society It is critical for welfare of our society that at least 5-10 percent of the best minds of each generation devote their lives to scholarship—thinking and innovation This result is not easy to achieve by bureaucracy in government No matter how deeply you study candles, you will not come up with electricity No matter how deeply you study horses and horse carts, you will not come up with cars No matter how deeply you study typewriters, you will not come up with laser printers and computers Whose imagination will invent the “electricity, cars and computers” of future?

18 A Question from Mom What do you do for a living? Teaching would satisfy her, but would not be entirely true Fortunately, she never asked. But two colleagues did, a sociologist and a physicist What do you do in accounting research? I could not give them the answer for Mom; they know better I managed to answer their questions to their apparent satisfaction (assuming they were not just being polite)

19 Perspectives, Organizations and Accounting Forms PerspectiveOrganization form Accounting form ClassicalEntrepreneurial without hierarchy Bookkeeping StewardshipEntrepreneurial with hierarchy Managerial Capital marketsPublicly tradedFinancial

20 Inclusivity of Accounting Forms Financial Managerial Bookkeeping

21 Firm as a Set of Contracts among Agents

22 To the Physicist The measurement angle Walked him through the problem of measurement of his personal wealth After counting the contents of his wallet, he was not sure how to proceed to the next step Then scaled the problem up to an organization of many people and activities He could see the difficulty, or at least did not pursue the matter further

23 But Most People Have No Idea of What We Do History Measurement Technology of accounting Aggregation Governance Contracts and organizational engineering Wealth creation Social organization (national budget, bank supervision) Standards and competition Could we invite our colleagues into the accounting house of research and show them interesting stuff we do? The Doctoral Program is an opportunity to look at our collective whole, and be inspired to extend the boundaries of our thought

24 Posing A Research Question What is the question you would like to have answered after the experiment? (A question is a single sentence with a question mark at the end.) What do you know already about the possible answers to the above question ? What are the various possible ways of finding an answer to the above question? What are the advantages and disadvantages of each method? How important is this question to YOU? What are the chances that the answer you get from the research will surprise you or others? What are the chances that it will change someone’s mind?

25 Posing a Research Question How would you conduct your research? (write down a design and plan) Is your design the simplest possible design to help answer the above question? What are the possible outcomes of research? Do the possible outcomes include at least one outcome that will answer the question you stated above? What is the chance that you will observe this outcome? Iterate as necessary

26 AAA Update –Intellectual Property Task Force –Global Accounting Digital Archive –New Electronic Journal: Current Issues in Auditing –AAACommons –Imagined World of Accounting: Program for Chicago Annual Meetings

27 Intellectual Property Task Force Development of new information and communications technologies (ICT) has shifted the economics of intellectual property. As with other academic associations, production of intellectual property has been a major activity of AAA. The Intellectual Property Task Force will examine the technological, economic, financial, organizational, competitive, and intellectual consequences of the changes in ICT for AAA, and recommend any changes to the Executive Committee, the Council and the membership of the AAA with respect to its financial structure, publications, organization, and other relevant actions.

28 Global Accounting Digital Archive Data availability, structure, depth, accessibility and cost are critical to accounting research to support basic, applied and practice research. Given new data technologies, there is an opportunity to develop a decentralized, global, cooperative, organized effort to make accounting literature and archives (non- copyrighted or copyright expired or released) readily, instantly and globally available to researchers to stimulate and support accounting as well as business research. Leading professional and academic accounting associations, forming a sponsoring coalition to create this public good, will serve as the catalysts to establish a unique resource on Internet which is unlikely to come into existence otherwise.

29 AAACommons Use of web technology for new means of communication, sharing, publication of ideas, research, curriculum, teaching materials, etc.

30 Imagined Worlds of Accounting Some Highlights of the Chicago AAA Program August 6-8, 2007

31 Plenary Addresses The Origin of Accounting –Denise Schmandt-Besserat, Professor Emerita of Art and Middle Eastern Studies, University of Texas at Austin (Archeology) Culture and the Nature of Human Sociality –Joseph Henrich, Professor of Culture, Cognition and Evolution, University of British Columbia (Anthropology) Accounting, Law and Social Norms. –Michael Hechter, Professor of Global Studies, Arizona State University (Sociology) –Eric Posner, Professor Law, University of Chicago Data and Economic Growth –Robert E. Lucas, Jr., University of Chicago, Nobel Laureate Hayek and Experiment –Vernon L. Smith, George Mason University, Nobel Laureate

32 Plenary Speakers Tuesday Lunch: John Dickhaut, University of Minnesota, AAA Presidential Scholar, 2007 Wednesday Lunch: Gary J. Previts, incoming President of the American Accounting Association

33 Follow-up Sessions on Plenaries Accounting, Anthropology and Archeology –Basu, Goetzmann, and Waymire Accounting and Social Norms –Paul Fischer and Mark Penno Accounting and the Macroeconomy –Kanodia and Dye Hayek, Accounting and Experiment –Bloomfield

34 At Large Sessions Europe Meets America: Diverse Research Perspectives –Biondi (France), Suzuki (UK), Lukka (Finland) History of Accounting Scholarship –Pierre Liang, George Sorter A Proposed Accounting Curriculum –Demski and Fellingham Big Unanswered Questions in Accounting –Ball, Fukui, Huddart, Nagar

35 At Large Sessions Financial Literacy: Programs and Response –Previts Point-Counterpoint 1 –Benston, Linsmeier on fair value accounting Point-Counterpoint 2 –Lynn Turner and Larry Ribstein on SOX Data Mining and Accounting –Srivastava

36 At Large Sessions Building Accounting Archives –Tonya Flesher SEC Regulation Update –Glover, Jorgensen, Taub Global Accounting Digital Archives Project –Vasarhelyi FASB Research Initiative –Bloomfield, Linsmeier

37 At Large Sessions Accounting and Neuroscience –John Dickhaut Alternative formats for Accounting Journals –Tony Tinker World Market for Accounting PhDs –Christensen, Banerjee, Wong, and Lukka Academic and Professional Qualifications –Jack Wilkerson Fiscal Wake Up Call for US –David Walker, Controller General of the US

38 Wednesday Afternoon Raffle Exciting sessions for Wednesday afternoon Attendance in each session on Wednesday afternoon (after lunch) earns you a raffle ticket At the end of the last session on Wednesday, we draw the winner of the raffle (must be present to win) Prize?

39 Thank Greg Waymire and the Program Committee for their hard work to develop an exciting program for these meetings

40 Finally In PhD programs, faculty ask you to read the stuff they wrote, and test you Awareness of the advantage grey hairs have over the youth are drilled in—we know, you don’t. What is kept hidden from you is your advantage over the older folks Your advantage: we know, you don’t You have a clean slate to generate new ideas, perspectives, problems, methods, and solutions

41 History of Scholarship and Creativity Long history of extraordinary creative achievements of the young Do not underestimate your own ability to transform our discipline—any discipline? Cooper’s dissertation was rejected Ball and Brown was pre-dissertation research Look at music: Presley, Hendrix, The Beatles, Led Zeppelin, Jay Z and many others How old were these folks at the peak of creativity?

42 Fresh Perspectives are Resisted, even Ridiculed People are skeptical of new ideas because most of them turn out to be wrong When they are right, they create problems for the establishment If you have a good new idea, expect resistance (faculty, editors, referees) Should you yield to their demands or fight? How you decide to answer that question will determine whether research is fun or a chore Remember the risk return trade off Don’t forget the contribution of modern management (and accounting and control) to jet aircraft, computers and our prosperity

43 So, Here Is An Idea Let the authorities in each jurisdiction choose two or more SETS of standards that companies are allowed to use in preparing their reports. Reporting companies pay a royalty to standard setting organization they choose, and these royalties are the sole source of revenue of the standard setting organizations (i.e., no SOX fees for FASB)

44 Fifteen Reasons for Competitive Standards Problem too complicated for a Cartesian solution; criterion for choosing standards unclear GAAP started as common law, bottom up evolution of practice, not GIAS Experimentation with alternatives will allow research data, comparison, discovery of better methods and learning Competition places bounds on complexity Introducing economic tension to help standard setter decisions

45 Fifteen Reasons for Competitive Standards Language works through variation of meaning (Esperanto failed) Examples: bond rating, auditing standards, university accreditation, appliances, state charter of corporations, stock exchanges, US and PA Deptts of Agriculture with no evidence of race-to-the-bottom One size does not fit all in a country or the world: clientele Relief from undue pressure from interest groups on standard setters

46 Fifteen Reasons for Competitive Standards Choice of standards set as an additional information signal Protection from special interest capture of regulatory body Uniform standards insufficient for uniform reports without uniform economies Competition blocks endless progression towards detail in a fractal world (infinite detail) Judgment as essence of a profession Cancerous impact of standards on accounting education and quality of people

47 The idea makes sense to some, not to others What Do You Think?

48 What is the Difference between a researcher and a government bond?

49 See You at the meetings next week! And do not forget to become a member of AAA Why?

50 Thank You for your participation; Thank KPMG for this wonderful initiative

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