Some Thoughts on Accounting Scholarship

Joel S. Demski

Presidential Address

August 22, 2001

 

Introduction

Some Warning Signs

Some Contributors

Some Interventions

Curriculum Challenge

 

 

Introduction

 

Tradition calls for me to reveal plans and aspirations for the coming year.  But a slight deviation from tradition will, I hope, provide some perspective on my thinking.

 

We have, in the past half century, made considerable strides in our knowledge of accounting institutions.  Statistical connections between accounting measures and market prices, optimal contracting, and professional judgment processes and biases are illustrative.  In the process we have raised the stature, the relevance, and the sheer excitement of intellectual enquiry in accounting, be it in the classroom, in the cloak room, or in the journals.

 

Of late, however, a malaise appears to have settled in.  Our progress has turned flat, our tribal tendencies have taken hold, and our joy has diminished. 

 

 

Some Warning Signs

 

One indicator is our textbooks, our primary communication medium and our statement to the world about ourselves.  I see several patterns here.  One is the unrelenting march to make every text look like People Magazine.  Form now leads, if not swallows, substance.  Another is the insatiable appetite to list every rule published by the FASB (despite the fact we have a tidal wave thanks to DIG, EIFT, AcSEC, SABs, and what have you).  Closely related is the interest in fads.  Everything, including this paragraph of my remarks, is now subject to a value added test.  Benchmarking, strategic vision, and EVA are everywhere.  Foundations are nowhere.  Building blocks are languishing in appendices and wastebaskets.

 

A second indicator is our journals.  They have proliferated in number.  But we struggle with an intertemporal sameness, with incremental as opposed to discontinuous attempts to move our thinking forward, and with referee intrusion and voyeurism.  Value relevance is a currently fashionable approach to identifying statistical regularities in the financial market arena, just as a focus on readily observable components of compensation is a currently fashionable dependent variable in the compensation arena.  Yet we know measurement error abounds, that other sources of information are both present and hardly unimportant, that compensation is broad based and intertemporally managed, and that compensating wage differentials are part of the stew.  Yet we continue on the comfortable path of sameness.

 

A third indicator is our work habits.  We have embraced, indeed been swallowed by,  the multiple adjective syndrome, or MAS:  financial, audit, managerial, tax, analytic, archival, experimental, systems, cognitive, etc.  This applies to our research, to our reading, to our courses, to our teaching assignments, to our teaching, and to the organization of our annual meeting.  In so doing, we have exploited specialization, but in the process greatly reduced communication networks, and taken on a near tribal structure. 

 

A useful analogy here is linearization.  In accounting we linearize everything in sight:  additive components on the balance sheet, linear cost functions, and the most glaring of all, the additive representation inherent in ABC, which by its mere structure denies the scope economy that causes the firm to jointly produce that set of products in the first place.  Linearization denies interaction, denies synergy; and our recent propensity for multiple adjectives does precisely the same to us.  We are doing to ourselves what we’ve done to our subject area.  What, we might ask, happened to accounting?  Indeed, I worry we will someday have a section specialized in depreciation or receivables or intangibles.

 

I hasten to add this particular tendency has festered for some time.  Rick Antle, discussing the “Intellectual Boundaries in Accounting Research” at the 88 meeting observed: 

 

“In carving out tractable pieces of institutionally defined problems, we inevitably impose intellectual boundaries. ...  My concern arises when, instead of generating fluid, useful boundaries, our processes of simplification lead to rigid, dysfunctional ones.”  (6/89 Horizons, page 109).

 

I fear we have perfected and made a virtue out of Rick’s concern.  Fluid boundaries are now held at bay by our work habits and natural defenses.

 

A final indicator is what appears to be coming down the road, our work in progress.  Doctoral enrollment is down, a fact.  It is also arguably factual that doctoral training has become tribal.  I, personally, have witnessed this at recent Doctoral and New Faculty Consortia, and in our recruiting at UF.  This reinforces the visible patterns in our textbooks, in our journals, and in our work habits.

 

 

Some Contributors

 

These patterns, of course, are not accidental.  They are largely endogenous.  And I think it is equally instructive to sketch some of the contributors.

 

One contributor is employers, their firms and their professional organizations.  Employers want and lobby for the student well equipped with the latest consulting fad, or the student well equipped to transition into a billable audit team member or tax consultant within two hours of the first day of employment.  Immediacy is sought and championed, though with the caveat of critical thinking skills somehow being added to the stew.  The comparative advantage line between University and employer-based training is not open for analysis here.  We, in the university, are expected to run employment training institutes.  The employer, with a natural focus on immediacy, is even looked to for intellectual leadership and perhaps program certification in this model.  That appalling idiom, “student as customer” reinforces this first job-employer bias, just as do recent program sponsorships by some of the large firms.  Need I mention the CPA examination, accreditation bodies or pseudo accreditation bodies?

 

A second contributor is administrators.  Administrators respond to employers, to journalists, to students and to alumni, but not to tomorrow’s students.  Polls and ratings and student evaluations are the currency of the realm.  Risk taking, innovation, fundamentals, and long term growth are not visible.  Zero variance is sought, at the woeful cost of disallowing options.  And, I might add, we even have the APLG section (or “group”) in the association.

 

A third contributor is publishers.  Do you think Chuck Horngren used a focus group when he wrote and Prentice-Hall published his path breaking text?  Do you think Gordon Shillinglaw used a focus group he wrote and Irwin published his path breaking textbook?  Do you think Bill Paton relied on focus groups?  Suffice it to say followship, timidity, and add-ons have replaced leadership.

 

A final contributor is ourselves, each and every one of us.  We have been entrusted, for a brief period of time, with a body of scholarship.  It is our responsibility to care for, to expand, to deepen and to share this body of scholarship, with our students, with one another, and with our successors.  Yet we ask employers what should be in our curricula, we engage the ratings games, with journalists and with our students, we squander the 150 hour requirement, we pander to professional exams, we take comfort in benchmarking among ourselves, we forget our role in the University’s governance, and we embrace the isolation of tribalism.

 

 

Some Interventions

 

But this is only half of the self-portrait.  (Indeed, Chapter 11 would be in order were this the entire story.)  The other half is the simply remarkable talent, energy, goodwill and opportunity that we have.  The issue, when all is said and done, is how to redirect this talent, this energy and this goodwill more directly toward those abundant opportunities.

 

It will come as no surprise when I tell you this has to come from us, from within us.  It will not come from the employers, from the administrators, from the publishers, or from the AAA.  And I think it is time to push back on these institutions and pressures.  It is time to reassert scholarly leadership.

 

Moreover, there are some collective things we can do, do in the hope of catalyzing some behavior changes.  I propose three for the coming year.

 

First, we will have a theme for the coming year:  “Reinvigorating Accounting Scholarship.”  A theme of this nature is simply a unifying idea, one  that I hope will be a recurrent element in AAA activities during the coming year.  It cannot produce new results or innovations; but it can remind us of our opportunities and responsibilities, and challenge us.

Second,  in an explicit attempt to challenge us to think and communicate more broadly, to broaden our networks, to push back against the short run pressures, and to return some joy to our activities, we will have a curriculum design contest.  Details are being posted on the AAA website today, but the basic idea is straightforward.  If you and a couple of colleagues had the opportunity, and if constraints were not an issue, what curriculum would you propose for your program?  What could and would you really do?  Show us how rich the study of accounting can be.  We even have a prize:  you get to showcase your ideas in San Antonio.

 

I know from personal experience that faculties can be recalcitrant, and highly imaginative when it comes to fighting change or taking risks.  But I also know from personal experience it is possible to abandon an entire curriculum.  So I am hopeful this exercise will produce some non-tribal thinking, will put some ideas on the table that we all can, and will, use.  This is, after all, who we are, who we can be! 

 

Third, in another explicit attempt to challenge us to think and communicate more broadly, we will make some structural changes in next year’s annual meeting.  Most important, we will try to group papers by topic and randomize over tribe.  Ideally, we will wind up with, say, a session, on compensation that has an analytic paper, an experimental paper, and an empirical paper.

 

In closing, it is time, it is time for us, to reinvigorate accounting scholarship, to reassert scholarly leadership.  I hope you will join in the curriculum challenge, and put a scare in the employers, the administrators, the publishers, your colleagues, and each and everyone of us.  I hope you will attend and participate in next year’s meeting.  I hope you will leave that meeting a little annoyed for having been goaded into stepping outside your comfort zone, but also with a renewed commitment to accounting scholarship.  Most of all, I hope the joy of scholarship will reappear and flourish, for each and everyone of us.