Many CPAs who work in public practice and corporate accounting harbor the idea of returning to college to share their professional experiences and help train future accountants. For those who might be interested, this article outlines the considerations and benefits of making the jump from practice to academia. There are several factors to consider in selecting an institution, choosing the right program, and preparing for the transition.
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Many CPAs fondly recall their college experiences, often so much that they desire to return to academia. If done for the right reasons, rejoining the academic world to develop and mentor young students can pay high returns, including a better work/life balance, intellectual stimulation through both teaching and research, and an improved sense of self-worth.
Entering academia comes at a price, however; doctoral students may have to forgo four to six years of current earnings to pursue a PhD. The doctoral degree does come with the possibility of attaining tenure, but one typically must produce original academic research in exchange for this privilege. If teaching is the only goal, this can generally be accomplished with only a master’s degree.
Another potential motivation is financial. Salaries for newly minted accounting PhD students are quite high, averaging nearly $150,000 per year for base compensation in 2014 [“2014–2015 Salary Survey Reports,” Association to Advance Collegiate Schools of Business (AACSB International), January 2015]. Job security can also be a motivating factor. Tenure provides a great deal of security, and the current shortage of accounting PhDs makes this opportunity ripe. Newly minted assistant professors attempting to make tenure do not, however, experience the same level of job security, and some change jobs numerous times before they earn tenure. A flexible schedule is another intangible benefit of the academic environment.
While the primary focus of this article is on traditional accounting PhD programs, several recent publications discuss the formulation of “nontraditional” doctoral programs for accountants (Carol C. Bishop, Douglas M. Boyle, Brian W. Carpenter, and Dana R. Hermanson, “Transitioning into Academia: A New Pathway for Practitioners,” Journal of Accountancy, March 2016, http://bit.ly/290Srlx; “An Examination of Non-Traditional Doctoral Education,” Pathways Commission, June 2014, http://bit.ly/292P9Uy). CPAs might explore these types of programs as a prospective fit for their specific career goals and needs.
The Financial Perspective
The decision to pursue a PhD in accounting carries financial ramifications. For some professionals, the choice can have a positive net present value, particularly for those in the earlier stages of their working careers, where the opportunity costs are lower (Robert F. Gary, Christine A. Denison, and Marvin L. Bouillon, “Can Obtaining an Accounting Ph.D. Provide a Positive Financial Return?” Issues in Accounting Education, February 2011, http://bit.ly/299g6Ws). For others with greater experience in accounting practice, the choice may involve a trade-off of financial compensation for career change.
Unlike some other graduate degrees, tuition and fees will not be out-of-pocket expenses, because most accounting PhD programs offer full scholarships. Most programs also have supplemental scholarships and stipends, which can provide an annual income ranging between $20,000 and $40,000 (Alisa G. Brink, Robson Glasscock, and Benson Wier, “The Current State of Accounting PhD Programs in the United States,” Issues in Accounting Education, February 2012, http://bit.ly/29lxfbg). These scholarships and stipends dramatically ease the financial burden of a PhD program, but do not completely alleviate the opportunity costs.
THE AUTHORS’ PATHS INTO THE CLASSROOM
Doug’s Transition into Academia
A few years ago, I decided to take the plunge into pursuing a PhD in accounting. I had previously been a senior manager within a large local CPA firm in Indianapolis. Academia had always appealed to me as a possible career choice; however, I had a stable and well-paying job that I would be giving up, one that could possibly lead to a partnership. I also had a family to support and no teaching or academic research experience. As a result, I expended a great deal of effort to know as much as I could about the choice I was about to make. This article is intended to share the information I gathered in order to better inform others considering such a leap.
Kelsey’s Transition into Academia
I left public accounting as a senior associate at a Big Four firm in Milwaukee just two years after starting with the firm. Although I entered public accounting upon graduation from Iowa State University, my passion remained at the university. Since my husband and I attended college together, he identified my fondness for higher education and encouraged me to pursue a PhD. I did not have many constraints upon entering a doctoral program; I did not have children and my husband was able to maintain employment. I did a bit of research regarding doctoral programs but primarily trusted my passion and jumped into academia. Through my doctoral studies I discovered I enjoy both teaching and research, and targeted a balanced school upon graduation. This article is intended to provide the information I wish I had known when making the jump.
Jim’s Transition into Academia
I left a position as corporate controller of a large division of a Fortune 500 company to enter a PhD program in midlife. Prior to the corporate position, I spent nearly nine years with a Big Four firm, rising to senior manager. The idea of being an accounting professor had loomed in my mind since my master’s program years earlier. My motivation was to share my experiences with future accountants as a way to make their entry as practicing accountants as smooth as possible. My research into doctoral programs was cursory, resulting in a big adjustment to the world of a PhD program. The information in this article would have benefitted me greatly.
Upon graduation, the overall job outlook for PhD students is robust. As mentioned above, there is currently a severe shortage of accounting faculty at the PhD level (R. David Plumlee and Philip M. J. Reckers, “Lessons Not Learned: Why Is There Still a Crisis-Level Shortage of Accounting Ph.Ds.?” Accounting Horizons, June 2014, http://bit.ly/292QP0e), which does not appear to be abating despite the efforts of industry and academia to increase PhD program enrollment and graduation (Douglas M. Boyle, Brian W. Carpenter, and Dana R. Hermanson, “The Accounting Faculty Shortage: Causes and Contemporary Studies,” Accounting Horizons, June 2015, http://bit.ly/296qT3d). Therefore, the probability of obtaining an assistant professor position upon graduation is very high.
The salaries for professors are very competitive with the upper echelon of public accounting. Average salaries are approximately $150,000 for new accounting PhD graduates, ranging higher for high-research institutions and lower for more teaching-focused institutions (AACSB, 2015). Quoted salaries are typically for the nine-month academic year, with additional opportunities available to enhance compensation (e.g., summer teaching and research stipends, textbook writing, consulting). Based on the authors’ experiences, other financial benefits, such as retirement plans, are comparable to or better than those in private practice.
Determine What You Want
If a CPA finds the benefits of pursuing an accounting PhD attractive, the next step is to determine her ultimate academic career goal. The type of accounting PhD program often dictates the type of job ultimately obtained. Transfers between PhD programs are difficult, often requiring a complete restart of studies, so this is an important part of preparation.
There are three overarching tenure-track career outcomes for an accounting PhD. One route ends with the PhD candidate working at what is informally known as a “teaching institution.” Teaching loads are higher at such schools; the typical requirement is to teach three or more classes per semester for both semesters of the academic school year, including several different course preparations as well. The research requirement, however, is typically much lower for teaching institutions. In contrast, high-research schools, also known as “R1 institutions,” tend to have much lighter teaching loads (e.g., teaching three classes of the same course for the entire year, often all in the same semester), but the quantity and quality of research expected is much higher. Many of these institutions require or aspire that their assistant professors publish in the “A” research journals, where rejection rates can be as high as 85–90%. As a result, salaries at R1 institutions tend to be much higher than those at teaching institutions. The third outcome, which lies somewhere between the two, is commonly known as the “balanced school.” The Exhibit provides examples and details the characteristics of the different tiers of accounting programs.
Teaching and Research Expectations of Faculty
Other, non–tenure track options are available to individuals with an accounting PhD and, in many cases, a master’s degree, including instructor, adjunct, and clinical positions. With such a critical shortage of faculty, these types of positions have become popular to fill teaching needs. Such positions usually do not offer the long-term security of tenure, but it is not uncommon for such individuals to enjoy long careers at the same institution. Salaries are typically lower for such positions, and many times, the teaching load is higher. The research requirement, if any, is usually well below that of a tenure-track position.
Knowing which outcome one wants is important to the selection of a PhD program. For example, a PhD program with a history of placing students at teaching institutions will likely not be successful in placing students at an R1 institution, and vice versa. For those interested in a more balanced career, choosing a midtier PhD program with a balanced track record of both teaching institution and R1 institution placements may make the most sense. This strategy is probably also most appropriate for those who are unsure about their desired career outcome.
All Programs Are Different
Many of the differences between accounting PhD programs are driven by the resources and research ideology of the department. Some programs are mandatory four-year programs, meaning the student must graduate, including completion of a dissertation, in four years. Others are predominantly four-year programs but offer the flexibility of an additional fifth year. Many programs, especially elite programs, are trending toward requiring five years, and some programs can occasionally take even longer to complete. According to a 2014 survey of PhD program coordinators, 36% of programs are four years in length, while 64% require five years or more to complete (Plumlee and Reckers 2014).
In addition, it is important to know which type of research one desires, as most accounting PhD programs have specific research method strengths. Academic research does not mean researching within the Accounting Standards Codification or the Internal Revenue Regulations, but instead entails the formulation of new and novel knowledge. Most of the learning that takes place within accounting PhD programs is concerned with studying research techniques and methodologies, many of which involve a curriculum heavily based in mathematics. Some programs also offer courses in teaching pedagogy. Very little, if any, of the learning in an accounting PhD program is focused upon advanced technical accounting concepts. Those with an “I only want to teach” mindset are not likely to be successful within a PhD program.
There are three main methodologies of accounting research: 1) behavioral or experimental research, 2) archival or econometric research, and 3) analytical research. Behavioral or experimental research entails conducting experiments (many times via written or online instruments) with a sample of human participants. Researchers then use statistical techniques to analyze the results. This can initially be time consuming, as it requires careful planning to ensure that the experiment and instrument are properly designed.
Archival or econometric research uses existing data (e.g., historical stock returns or variables from financial statement databases) to test research questions using sophisticated statistical techniques. Archival or econometric research requires less up-front planning, but does require programming skills (e.g., SAS, SPSS, Stata) and intense econometrics training. One of the main difficulties of this approach is finding extant data to test unique research questions.
Analytical research is the least common of the three methodologies and involves intense theory formulation using advanced mathematics (e.g., multivariate calculus, real analysis, stochastic calculus, and probability and statistics) to predict the behaviors of market participants. Analytical research is reserved for those with the best mathematical skills.
All three methodologies are used to explore ideas in settings such as auditing, tax, financial accounting, information systems, and managerial accounting. Perhaps the best way to choose a methodology is to read research articles, (especially from the top five accounting journals), speak to faculty, and attend research presentations. Attending an American Accounting Association regional or sectional meeting can also be a good way to meet people and to form better expectations as to what the research aspect of the job entails. Visiting schools on a more informal basis (before an official interview) can also be advantageous, especially in learning about research.
Most of the learning that takes place within accounting PhD programs is concerned with studying research techniques and methodologies.
Another major difference between accounting PhD programs and other disciplines is the students’ employment within the program. Teaching requirements during the PhD program can range from zero to 28 class sections during the program study, with the average student teaching four or five sections (Brink et al. 2012). Heavier teaching requirements are beneficial for obtaining teaching experience, but can hinder research formulation. Knowing the teaching requirements of each program is important in achieving one’s ultimate goals.
Interviewing PhD program coordinators is an excellent way to assess whether a program is the right fit on many dimensions, especially teaching requirements. These discussions can also be helpful in determining the research interests of the faculty and should help a potential student in the decision-making process. It is a good strategy to select a program that specializes in the type and topical areas of research that suit one’s interests. Assessing the likelihood of failure is another benefit; every program has its own historical failure or dropout rate, with some programs having next to zero instances and others having many. Many programs have comprehensive exams after the second or third year of study that can result in the dismissal of students who are unsuccessful. Others have first-, second-, or third-year research paper requirements that can lead to dismissal if unfulfilled. Inquiring into these circumstances and what steps programs take to prevent unsuccessful candidates can help prospective candidates make their decision.
After determining one’s desired academic career, the next step is to find PhD programs that support this goal. One of the biggest obstacles to admission into a PhD program is the Graduate Management Admissions Test (GMAT) score. The GMAT is used to assess whether an individual has the problem-solving skills (both verbal and quantitative) necessary to conduct research. Many programs have a minimum GMAT score of 650 (although exceptions can be made), and the more elite programs typically require a minimum score of 700. The average GMAT score of current PhD students is near 692 (Brink et al. 2012). These scores put an individual at the upper range of the distribution of scores (the 10% level or higher) and are difficult to attain. As a result, some preparation for the GMAT is a necessity; various test prep courses are available online.
Beyond the GMAT, some additional academic preparation can be helpful. For those who have established careers and have been out of the classroom for a long period of time, additional academic preparation, particularly math and statistics courses, may be of value. During the first two or more years, the PhD program will require students to take classes to prepare them to conduct research. Any preknowl-edge or skills in these classes will make them easier. The classes include microeconomic theory, mathematical economics, econometrics, statistics, finance seminars, psychology seminars, and accounting research seminars. Some of the skills that are useful in these classes and, ultimately, in research include a knowledge of 1) calculus, including multivariate differentiation; 2) inferential statistics, especially regression analysis; 3) statistical programming languages (e.g., SAS, SPSS, Stata); and 4) basic, math-based microeconomic theory.
Writing skills are also invaluable (Brooke Beyer, Don Herrmann, Gary K. Meek, and Eric T. Rapley, “What It Means to Be an Accounting Professor: A Concise Career Guide for Doctoral Students in Accounting,” Issues in Accounting Education, May 2010, http://bit.ly/291CP28). Once classes are completed (usually in the first two years of the program), the student moves on to the dissertation phase, which is an exercise in developing a novel research idea, designing and conducting empirical tests, and analyzing the results. Writing is crucial, because many research projects fall short due to an inability to communicate the idea in a concise fashion or to provide a convincing argument for why the idea is important and worthy of research efforts.
Developing relationships with other students is a key to success.
Teaching and presentation skills are also important, both within a program and afterward. Poor teaching can prevent a new assistant professor from making tenure, and good teaching skills are usually obtained with practice. If possible, one may consider teaching a course as an adjunct before entering a PhD program. This will assist in both building teaching skills and helping to determine if the individual has the base aptitude and passion for teaching.
The next step is positioning oneself to get offers from the desired schools. This process includes reaching out to programs in advance of formally applying and preparing for the interview process. Develop a list of questions to ask each program. In addition, identify and reach out to recent program graduates to inquire about their experiences. Preparing for the interview process should also include writing a succinct statement of purpose that details why the CPA is choosing to pursue this career. Having a statement of purpose will enable better articulation of the reasons for joining academia. PhD programs are very resource and labor intensive for faculty; most programs only admit a few students per year and will only make offers to those who, they believe, have a reasonable chance of completion. Being able to convey the potential skill set and proper mind-set, especially after a long absence from academia, will be invaluable in the candidate selection process.
If possible, it might also be a good idea to contact current students of the program. Developing relationships with other students is a key to success, as the skill sets of the students can at times be very complementary, enabling everyone to better navigate the program’s curriculum.
The Bright Future of the Accounting PhD
Moving from accounting practice to academia can be a very rewarding experience and an excellent career choice. Such a decision should not be taken lightly, however, as it involves a significant time commitment and carries substantial opportunity costs. The more information a PhD candidate can obtain as a part of the decision process, the better the outcome. Obtaining an accounting PhD will require a different skill set from the one obtained as a practitioner, but this transition can be made easier through proper preparation.