In 1990, William Weiss wrote “What’s Going On in Business Schools?” (Management Accounting, May 1990), a critical look at a business and accounting academic environment that did not value individuals with practical knowledge or experience, emphasized academic research on topics disconnected from actual problems, and did not require individuals to spend the majority of their time on teaching activities. He also pointed out that entry to a professorial position required three to five years of full-time commitment to earn a PhD, with the reward of an “inappropriately high” salary.
Over 25 years later, the situation with respect to these issues has not improved; indeed, it has gotten worse. Many faculty still have little or no experience in accounting or business, and there is no requirement that faculty remain current in their field. The market for PhDs continues to be contrived, and the time to earn a PhD has, with few exceptions, only gotten longer and no more relevant to educating students in the practice of accounting. Accounting research, especially that most valued by academia, is still mostly irrelevant to anyone other than doctoral students and professors, while student learning is still undervalued by faculty at many institutions. University administrators are most concerned with enrollment numbers, student retention, and graduation rates, an approach that contributes to undesirable educational practices.
In this author’s opinion, it is again time to ask: What’s going on at business schools? Several factors have brought matters to this point, including university management practices, the role of research in universities and its relationship to accounting practice, the requirements to earn an accounting PhD, and the role of accounting and business accreditation provided by the Association to Advance Collegiate Schools of Business (AACSB International).
University Management Practices
The public considers university operations and higher education as a “black box”; what goes on in a university is beyond its ability to comprehend. Nothing could be further from the truth. First and foremost, universities are managed to accommodate the faculty. The roots of this lie in the tenure system, designed to protect individuals professing unpopular points of view from being denied continued employment. The question is whether this view should be applied to all colleges in a university; its underpinnings may not apply in areas such as accounting and business. Business faculty, however, embrace the practice because it fosters job security.
There is an almost complete lack of accountability for any aspect or outcome of university operations. Many decisions are delegated to committees composed mostly of tenured individuals. This has the effect of diluting responsibility; poor decisions result in no penalties, and no one loses their job because of a bad outcome. Many individuals in academia are pressed into administrative roles that they may not be suited for. Although some perform university service out of a sense of duty, the strong focus on research for career success effectively penalizes these individuals and encourages them to avoid service roles. Thus, turnover among deans and department chairs is high.
The Role of Accounting Research
Research is often the lifeblood of the sciences; faculty obtain research grants to support work toward discovery and development of new materials, software, or drugs that save or improve lives. On the other hand, no such discoveries occur as a result of accounting research, and, not coincidentally, there is no significant funding source for these efforts. Furthermore, it is documented that accounting research is among the least cited disciplines in business, with most of the citations appearing in other accounting journals (Markus Biehl, Henry Kim, and Michael Wade, “Relationships among the Academic Business Disciplines: A Multi-Method Citation Analysis,” Omega, August 2006, http://bit.ly/2f5ZJgf; Brad Tuttle and Jesse Dillard, “Beyond Competition: Institutional Isomorphism in U.S. Accounting Research,” Accounting Horizons, December 2007, http://bit.ly/2uWGr0D).
The crucible of discovery in accounting and business is in practice, not university departments.
The crucible of discovery in accounting and business is in practice, not university departments. Individuals in business must solve problems in near–real time; managers cannot wait for academics to study an issue for years. In some cases (e.g., information systems), it may be years before current practice is reported in accounting textbooks and journals. Accounting research is increasingly detached from practice (Anthony G. Hopwood, “Whither Accounting Research?” Accounting Review,October 2007, http://bit.ly/2vqwg7B). Who in the practice community has ever read an article published in the Accounting Review, Journal of Accounting Research, or Journal of Accounting and Economics?
The business academy primarily promotes the publication of descriptive research based on historical data and providing verifiable conclusions, while at the same time denouncing prescriptive studies that predict and suggest how business practices might be improved. To practitioners, the results are simply curiosities reported by detached observers. This perspective limits how business research can inform readers and impedes business academics from discoveries that could improve business education and practice. The divide between accounting research and practice has been growing for some time (Nicole V.S. Ratzinger-Sakel and Glen L. Gray, “Moving toward a Learned Profession and Purposeful Integration,” Journal of Accounting Literature, October 2015, http://bit.ly/2uSE9RO; Janek Ratnatunga, “Ivory Towers and Legal Powers,” December 2012, http://bit.ly/2tXfbxD). Exceptions to this research model are few; while academics may also publish in practitioner-oriented journals, this type of research is not as highly rewarded at many schools as is research published in top academic journals.
Requirements for the Accounting PhD
An individual earning a PhD in accounting typically learns very little about accounting or how to teach accounting. Instead, the degree is about how to conduct research, based largely on development and testing of theories. This approach lends itself well to the physical and social sciences, where natural laws exist; however, accounting is an applied discipline. The rules of accounting are a human construct, highly susceptible to political influences. Accounting itself was late in becoming an academic discipline; in order to fit under the academic umbrella, faculty developed its research process to resemble that of other disciplines.
There is rarely a formal, substantive component of a PhD in business concerned with university teaching, adult education, educational assessment, or how to teach online, even though 50% or more of an academic’s job responsibility is teaching related. Instead, doctoral students are handed a model developed by other, older faculty and told to “go teach.” Business and accounting programs have access to colleges of education, with professionals who study all aspects of teaching and learning, but seldom make use of them. Some business schools have established centers to provide teacher training or support, but the use of these tools is rarely required or incentivized.
Once admitted to the academy, there is no mechanism to require accounting teachers to be up-to-date on accounting practice. There is no need to renew our experience every few years, take a test, or get relicensed. Instead, faculty are considered “current” if they use the latest edition of a textbook or publish papers read by colleagues and graduate students. Because the most rewarded articles are often unrelated to practice, this activity not only fails to promote currency, it actually stands in the way of it. In addition, the percentage of new faculty who are CPAs is at a 30-year low and declining rapidly (Timothy J. Fogarty and William H. Black, “Further Tales of the Schism: U.S. Accounting Faculty and Practice Credentials,” Journal of Accounting Education, September 2014, http://bit.ly/2uYYfs4).
Over the past 30 years, there has always been greater demand for accounting PhDs than supply. This is because, first, doctoral program directors are good at sustaining the market for graduates, cutting admissions as necessary if the market softens. Second, the length of PhD programs and the requirement for full-time residency dissuade practitioners from pursuing academic careers; mid-career professionals with families and debt cannot afford to live on a graduate stipend. Finally, competition between schools, especially for the most sought-after graduates, boosts salaries. A few wealthy institutions are willing to pay whatever it takes to hire preferred candidates, thus inflating starting salaries elsewhere.
The Accreditation Process
Contrary to popular opinion, accreditation does not provide assurance that faculty have any practical qualifications or experience with accounting and business, nor formal training in education. The most popular accrediting body for business and accounting is AACSB International. Years ago, the standards for accreditation were largely based on research output; however, after a number of years the organization found itself running out of new schools to enlist. Under the AACSB’s current, “mission-based” standards, schools now earn accreditation based on whether it appears they do what they set out to do, whether that is produce research, emphasize teaching, or something in between. This opened the AACSB’s market to a host of institutions less focused on research and foreign universities.
Generally, accreditation says little more than that a school has a high percentage of accounting and business faculty who have earned PhDs. This also supports the market for business PhDs; although the AACSB has expanded its perception of faculty roles to include research, teaching, and practical experience, the self-declared mission of prominent business schools is academic research. Because business schools and not the AACSB set rules for tenure and compensation, accreditation has not encouraged faculty to spend more time focused on practice issues.
In addition, accreditation is not a completely independent exercise. Accreditation teams are mostly composed of other business school deans and department chairs, who are loath to criticize their colleagues at other institutions, since those being judged may later serve as judges. An accreditation visit generally lasts no more than 48 hours and is composed mostly of meetings with faculty, students, and administrators. What assurances could one provide after so little time and without collection and evaluation of independent evidence?
Moreover, in recent years, AACSB accreditation has emphasized what is called “assurance of learning.” This purports to be an evaluation of student learning outcomes; however, there is no independent, verifiable system for assessing learning outcomes. The measures reported during accreditation are self-generated by faculty and administrators, so that the professors themselves decide if their own students learned anything or not. Best practices in research would require that student knowledge be assessed by an unbiased agent before and after a course or program of study, compared to a set of agreed upon expectations, and perhaps evaluated against the grades awarded. Such a system would be time consuming and expensive, and thus remains so far untried.
Generally, accreditation says little more than that a school has a high percentage of accounting and business faculty who have earned PhDs.
Consequences of the Current System
The primary objective of academic management and faculty is to preserve the status quo, and not without reason. Accounting and business academics spend three to twelve hours per week in the classroom, three on office hours, and the remaining time self-managed. Preparation time to teach classes may require several hours a week as a new professor and almost no time after a few years. Professors have nine-month contracts with summers off, one month off at Christmas, spring break, and other holidays. Some faculty may invest many hours per week to their academic responsibilities, but because they are salaried and (especially tenured faculty) largely unmonitored, the temptation arises to cut hours worked to raise the already substantial hourly rate. As quoted in a recent article of the AACSB’s flagship publication BizEd, “tenure is a cancer in higher education … universities cannot both say that education matters and pretend that education does not matter by using undergraduate tuition to subsidize research” (Tricia Bisoux, “Global and Campus-Free,” November/December 2016, http://bit.ly/2ukjMJz).
Some faculty will say that they spend time away from the classroom and during breaks writing journal articles, and this is true in some cases. But the structure, delivery methods, and evaluation of effectiveness for most courses are not based on education research, but instead on tradition, faculty and administrative convenience, and student opinions. Student evaluation scores serve as the primary measure of teaching effectiveness; however, more than 30 years of research on the subject shows they cannot be used to determine effective teaching or learning and are easily manipulated (Philip C. Abrami, Sylvia d’Apollonia, and Peter A. Cohen, “Validity of Student Ratings of Instruction: What We Know and What We Do Not,” Journal of Educational Psychology, June 1990, http://bit.ly/2f89xX6; Dennis E. Clayson, “Student Evaluations of Teaching: Are They Related to What Students Learn?” Journal of Marketing Education, April 2009, http://bit.ly/2voBDDy; James J. Wallace and Wanda A. Wallace, “Why the Costs of Student Evaluations Have Long Since Exceeded Their Value,” Issues in Accounting Education, May 1998, http://bit.ly/2vtkXf4). Some institutions use independent review to additionally evaluate teaching, but because tenure at prominent business schools is the reward for publishing, junior professors who conduct research rarely face consequences for poor classroom performance, and tenured professors are essentially immune.
There are endless opportunities to streamline, condense, and reformat existing business programs, develop new programs that meet current market demands, and improve student learning outcomes.
At the same time, beginning salaries for new assistant professors in accounting are in the low-to-middle six figures and in excess of $200,000 at prestigious institutions. Many individuals also receive generous summer stipends for a number of years at up to one-third of their base salary. Salaries are paid not according to the ability to teach students, but because of the gap between supply and demand for accounting PhDs, perceptions/expectations of their ability to publish in academic accounting journals, efforts by academic administrators to secure more faculty resources, and the guidelines of AACSB International that support employment of PhDs.
Suggestions for Change
If asked to outline a program to train accountants, few would offer the system in place today. It is inefficient, expensive, and slow to adapt, and its effectiveness for imparting knowledge is untested and not subject to independent verification. Success for students who take the CPA exam may be more strongly related to CPA review courses than classes in university accounting programs. Many employers readily admit that they don’t expect a great deal from new graduates; as a firm recruiter recently told this author, “I get what I can use, not what I want.”
In recent years, two significant reports were issued concerned with changes that need to occur in business education in the United States: the Pathways Commission Report (2012, http://bit.ly/2uZrNpi) and the Promise of Business Doctoral Education (AACSB, 2013, http://bit.ly/2vta2lD). In addition, in 2012 Ernst & Young Australia issued a white paper, “University of the Future” (https://go.ey.com/2wlOlA0), which discussed five drivers of change in higher education: democratization of knowledge and access, competition for students and funding, digital technologies, global mobility for students and faculty, and integration with industry. Taken together, these reports suggest several changes that need to occur in order to make higher education more responsive to the public. There is no impetus among academics, however, to adopt any recommendation from these reports, and those that are undertaken often occur at a glacial pace. Until such changes become part of the academic’s job description, expect little movement without pressure from employers and funders of higher education (i.e., state legislatures, donors, students/parents).
The public has invested billions of dollars in business school personnel and facilities whose operations are rarely based on best practices and run in large part for the convenience of the faculty. At the same time, there are endless opportunities to streamline, condense, and reformat existing business programs, develop new programs that meet current market demands, and improve student learning outcomes. Reforms to accounting and business education will attract new clientele and support. For all of these reasons, business schools need to be more lean, nimble, and relevant to the students and employers they are supposed to serve.
