Not everything that can be counted, counts. And not everything that counts can be counted.
Albert Einstein

For a long time, elite accounting researchers could find no “empirical evidence” of widespread earnings management. All they had to do was look up from the computers where their heads were buried.

There is an old expression "it's close enough for government work." Lets say a speaker says "it's close enough for accounting work." What word describes the relationship between those two phrases? In other words, the audience knows the original phrase and they know the speaker, in a sense, is modifying the phase to make a point.
Glen Gray

Probably be an accountant. I like to figure out stuff. In accounting, if you miss one number you get the whole thing wrong. You have to be perfect --- I'm a perfectionist.
Giovani Soto (catcher for the Chicago Cubs when asked what he'd like to be if he wasn't in professional baseball), as quoted in an interview with Mary Burns in Sports Illustrated, June 2008
Jensen Comment
If Soto only knew that accountants are second only to economists in terms of inaccuracies. When accountants total up the numbers on a balance sheet the total is always accurate, but the numbers being added up can be off by 1000% or more. Accuracy varies of course. Cash counts are highly accurate. Fixed assets, net of depreciation, are make-pretend within limits. Intangible asset valuations are about as accurate as ground eyesight measurements of floating cloud dimensions on a windy day. Accountants make highly inaccurate estimates of assets, liabilities, and equities. Then accountants change hats and chairs and add these estimates up very accurately and pretend that the total must mean something --- but accountants aren't sure what.

If Soto wants accuracy perhaps he should become a baseball statistician collecting up subjective estimates of the umpires. In the business world, accountants are the statisticians and the umpires. Therein lies the problem. An umpire decides what's a ball/strike, hit/foul, etc. and then leaves it up to baseball statisticians to book the numbers. In the world of business, accountants decide what are current versus deferred revenues, current versus capitalized costs, and additionally make highly subjective estimates about values of such things as forward contracts and interest rate swaps. After making their inaccurate estimates they then put on another hat, change chairs, and record their own estimates to the nearest penny. They're the business world's umpires and statisticians who simply change hats and chairs and wait for the investors to file lawsuits against them.

Brief Summary of Accounting Theory

Bob Jensen at Trinity University

Warning 1:  Many of the links were broken when the FASB changed all of its links.  If a link to a FASB site does not work , go to the new FASB link and search for the document.  The FASB home page is at http://www.fasb.org/ 

Warning 2:  In February 2008 the FASB for the first time allowed users free access to its "FASB Accounting Standards Codification" database. Access will be free for at least one year, although registration is required for free access. Much, but not all, information in separate booklets and PDF files may now be accessed much more efficiently as hypertext in one database. The document below has not been updated for the Codification Database. Although the database is off to a great start, there is much information in this document and in the FASB standards that cannot be found in the Codification Database. You can read the following at http://asc.fasb.org/asccontent&trid=2273304&nav_type=left_nav

Welcome to the Financial Accounting Standards Board (FASB) Accounting Standards Codification™ (Codification).

The Codification is the result of a major four-year project involving over 200 people from multiple entities. The Codification structure is significantly different from the structure of existing accounting standards. The Notice to Constituents provides information you should read to obtain a good understanding of the Codification history, content, structure, and future consequences.

Click here to view the Notice to Constituents (Adobe Acrobat format).

FASB's Accounting Standards Codification --- http://asc.fasb.org/home

FASB Master Glossary --- http://asc.fasb.org/glossary&letter=D

**************************

Accounting History in a Nutshell

Islamic and Social Responsibility Accounting

Key Differences Between International (IFRS) and U.S. GAAP (SFAS)

Accounting Research Versus the Accountancy Profession

Learning at Research Schools Versus "Teaching Schools" Versus "Happiness"
With a Side Track into Substance Abuse

Why must all accounting doctoral programs be social
science (particularly econometrics) doctoral programs?
Why accountancy doctoral programs are drying up and
why accountancy is no longer required for admission or
graduation in an accountancy doctoral program

GMAT: Paying for Points

Accounting Journal Lack of Interest in Publishing Replications

Role of Accounting Standards in Efficient Equity Markets

Controversies in Setting Accounting Standards

Should "principles-based" standards replace more detailed requirements for complex
financial contracts such as structured financing contracts and financial instruments derivatives contracts?

Why Let the I.R.S. See What the S.E.C. Doesn't?

Radical Changes in Financial Reporting

Underlying Bases of Balance Sheet Valuation

The Controversy Between OCI versus Current Earnings

Accrual Accounting and Estimation 

Controversy Over  the SEC's Rule 144a

Cookie Jar Accounting and FAS 106

FIN 48 Liability if Transaction Is Later Disallowed by the IRS

Controversy Over FAS 2 on Research and Development (R&D)

Earnings Management, Agency Theory, and Accounting Manipulations 

Goodwill Impairment Issues 

Purchase Versus Pooling: The Never Ending Debate

Off-Balance Sheet Financing (OBSF)

Insurance:  A Scheme for Hiding Debt That Won't Go Away

CDOs: A Scheme for Hiding Debt That Won't Go Away

Pensions and Post-retirement benefits:  Schemes for Hiding Debt 

Leases:  A  Scheme for Hiding Debt That Won't Go Away 

Accounting for Executory Contracts Such as
Purchase/Sale Commitments and Loan Commitments

Debt Versus Equity (including shareholder earn-out contracts)

Time versus Money

Intangibles and Contingencies:   Theory Disputes Focus Mainly on the Tip of the Iceberg

Intangibles:  An Accounting Paradox

Intangibles:  Selected References On Accounting for Intangibles

EBR:  Enhanced Business Reporting (including non-financial information)

The Controversy Over Revenue Reporting and HFV 

The Controversy Over Employee Stock Options as Compenation  

Accounting for Options to Buy Real Estate

The Controversy over Accounting for Securitizations and Loan Guarantees  

The Controversy Over Pro Forma Reporting

Triple-Bottom (Social, Environmental) Reporting  

The Sad State of Government Accounting and Accountability

Which is More Value-Relevant: Earnings or Cash Flows?

The Controversy Over Fair Value (Mark-to-Market) Financial Reporting

Online Resources for Business Valuations
See http://www.trinity.edu/rjensen/roi.htm

Understanding the Issues 

Issues of Auditor Independence 

Quality of Earnings, Restatements, and Core Earnings

Sale-Leaseback Accounting Controversies
http://www.trinity.edu/rjensen/ecommerce/eitf01.htm#SaleLeasback

Economic Theory of Accounting

Socionomics Theory of Finance and Fraud

Facts Based on Assumptions:  The Power of Postpositive Thinking

Critical Postmodern Theory --- http://www.uta.edu/huma/illuminations/

Mike Kearl's great social theory site

Bob Jensen's threads on GAAP comparisons (with particular stress upon derivative financial
instruments accounting rules) are at http://www.trinity.edu/rjensen/caseans/canada.htm
The above site also links to more general GAAP comparison guides between nations.

Implications of Bad Auditing on Capital Markets
and Client's Cost of Captial
http://www.trinity.edu/rjensen/FraudConclusion.htm#IncompetentAudits

Bob Jensen's threads on corporate governance are at
http://www.trinity.edu/rjensen/fraud.htm#Governance

Great Minds in Management:  The Process of Theory Development --- http://www.trinity.edu/rjensen//theory/00overview/GreatMinds.htm

"Cornell Theory Center Aids Social Science Researchers," PR Web, June 19, 2006 --- http://www.prweb.com/releases/2006/6/prweb400160.htm

How Do Scholars Search? --- http://www.trinity.edu/rjensen/Searchh.htm#Scholars

Some of the many, many lawsuits settled by auditing firms can be found at http://www.trinity.edu/rjensen/Fraud001.htm

FREE access to ANNUAL REPORTS in XBRL --- http://www.trinity.edu/rjensen/XBRLandOLAP.htm#TimelineXBRL
From EDGAR Online --- http://www.tryxbrl.org/

You can order back issues or relevant links management and accounting books and journals from MAAW --- http://maaw.info/

Free Access to Back Issues of The Accounting Review --- http://maaw.info/TheAccountingReview.htm 

Bob Jensen's threads on special purpose (variable interest) entities are at http://www.trinity.edu/rjensen//theory/00overview/speOverview.htm

"Visualization of Multidimensional Data" --- http://www.trinity.edu/rjensen/352wpVisual/000DataVisualization.htm 

Bob Jensen's threads on XBRL are at http://www.trinity.edu/rjensen/XBRLandOLAP.htm#XBRLextended 

Accounting for Electronic Commerce, Including Controversies on Business Valuation, ROI, and Revenue Reporting --- http://www.trinity.edu/rjensen/ecommerce.htm 

Comparisons of International IAS Versus FASB Standards --- http://www.deloitte.com/dtt/cda/doc/content/pocketiasus.pdf 

This is a Good Summary of Various Forms of Business Risk  --- http://www.erisk.com/portal/Resources/resources_archive.asp 

1. Enterprise Risk Management

2. Credit Risk

3. Market Risk

4. Operational Risk

5. Business Risk

6. Other Types of Risk?

Accounting History in a Nutshell

Confucius is described, by Sima Qian and other sources, as having endured a poverty-stricken and humiliating youth and been forced, upon reaching manhood, to undertake such petty jobs as accounting and caring for livestock.

Early accounting was a knotty issue
South American Indian culture apparently used layers of knotted strings as a complicated ledger.
Two Harvard University researchers believe they have uncovered the meaning of a group of Incan khipus, cryptic assemblages of string and knots that were used by the South American civilization for record-keeping and perhaps even as a written language. Researchers have long known that some knot patterns represented a specific number. Archeologist Gary Urton and mathematician Carrie Brezine report today in the journal Science that computer analysis of 21 khipus showed how individual strings were combined into multilayered collections that were used as a kind of ledger.
Thomas H. Maugh, "Researchers Think They've Got the Incas' Numbers," Los Angeles Times, August 12, 2005 ---
http://www.latimes.com/news/science/la-sci-khipu12aug12,1,6589325.story?coll=la-news-science&ctrack=1&cset=true
Also note http://snipurl.com/incaknots   [64_233_169_104

Jensen Comment:  I'm told that accounting tallies in Africa and other parts of the world preceded written language.  However, tallies alone did not permit aggregations such as accounting for such things as three goats plus sixty apples.   Modern accounting awaited a combination of the Arabic numbering ( http://en.wikipedia.org/wiki/Arabic_numbers ) and a common valuation scheme for valuing heterogeneous items (e.g., gold equivalents or currency units) such that the values of goats and apples could be aggregated.  It is intriguing that Inca knot patterns were something more than simple tallies since patterns could depict different numbers and aggregations could possibly be achieved with "multilayered collections."

---

From Texas A&M University
Accounting History Outline --- http://acct.tamu.edu/giroux/history.html

---

Accounting History (across hundreds of years)
 A Change Fifty-Years in the Making, by Jennie Mitchell, Project Accounting WED Interconnect --- http://accounting.smwc.edu/historyacc.htm

Serious Accounting Historians May Find Some Things of Use Here
Advanced Papyrological Information System from Columbia University --- http://www.columbia.edu/cu/lweb/projects/digital/apis/

APIS is a collections-based repository hosting information about and images of papyrological materials (e.g. papyri, ostraca, wood tablets, etc) located in collections around the world. It contains physical descriptions and bibliographic information about the papyri and other written materials, as well as digital images and English translations of many of these texts. When possible, links are also provided to the original language texts (e.g. through the Duke Data Bank of Documentary Papyri). The user can move back and forth among text, translation, bibliography, description, and image. With the specially-developed APIS Search System many different types of complex searches can be carried out.

APIS includes both published and unpublished material. Generally, much more detailed information is available about the published texts. Unpublished papyri have often not yet been fully transcribed, and the information available is sometimes very basic. If you need more information about a papyrus, you should contact the appropriate person at the owning institution. (See the list of contacts under Rights & Permissions.)

APIS is still very much a work in progress; current statistics are shown in the sidebar at right. Other statistics are available on the statistics page in the project documentation. Curators of collections interested in becoming part of APIS are invited to communicate with the project director, Traianos Gagos.

More Than a Numbers Game: A Brief History of Accounting
Author: Thomas A. King
ISBN: 0-470-00873-3
Hardcover 242 pages
September 2006

Inspired by a 1998 speech by former SEC Chairman Arthur Levitt, this book addresses the why of accounting instead of the how, providing practitioners and students with a highly readable history of U.S. corporate accounting. Each chapter explores a controversial accounting topic. Author Thomas King is treasurer of Progressive Insurance.
SmartPros Newsletter, September 25, 2006

More Than a Numbers Game: A Brief History of Accounting
Author: Thomas A. King
ISBN: 0-470-00873-3
Hardcover 242 pages
September 2006

Inspired by a 1998 speech by former SEC Chairman Arthur Levitt, this book addresses the why of accounting instead of the how, providing practitioners and students with a highly readable history of U.S. corporate accounting. Each chapter explores a controversial accounting topic. Author Thomas King is treasurer of Progressive Insurance.
SmartPros Newsletter, September 25, 2006

Jensen Comment
The Chief Accountant of the SEC under Arthur Levitt was one of my heroes named Lynn Turner.
Let me close by citing Harry S. Truman who said, "I never give them hell; I just tell them the truth and they think its hell!"
Great Speeches About the State of Accountancy
"20th Century Myths," by Lynn Turner when he was still Chief Accountant at the SEC in 1999 --- http://www.sec.gov/news/speech/speecharchive/1999/spch323.htm

It is interesting to listen to people ask for simple, less complex standards like in "the good old days." But I never hear them ask for business to be like "the good old days," with smokestacks rather than high technology, Glass-Steagall rather than Gramm-Leach, and plain vanilla interest rate deals rather than swaps, collars, and Tigers!! The bottom line is—things have changed. And so have people. Today, we have enormous pressure on CEO’s and CFO’s. It used to be that CEO’s would be in their positions for an average of more than ten years. Today, the average is 3 to 4 years. And Financial Executive Institute surveys show that the CEO and CFO changes are often linked. In such an environment, we in the auditing and preparer community have created what I consider to be a two-headed monster. The first head of this monster is what I call the "show me" face. First, it is not uncommon to hear one say, "show me where it says in an accounting book that I can’t do this?" This approach to financial reporting unfortunately necessitates the level of detail currently being developed by the Financial Accounting Standards Board ("FASB"), the Emerging Issues Task Force, and the AICPA’s Accounting Standards Executive Committee. Maybe this isn’t a recent phenomenon. In 1961, Leonard Spacek, then managing partner at Arthur Andersen, explained the motivation for less specificity in accounting standards when he stated that "most industry representatives and public accountants want what they call ‘flexibility’ in accounting principles. That term is never clearly defined; but what is wanted is ‘flexibility’ that permits greater latitude to both industry and accountants to do as they please." But Mr. Spacek was not a defender of those who wanted to "do as they please." He went on to say, "Public accountants are constantly required to make a choice between obtaining or retaining a client and standing firm for accounting principles. Where the choice requires accepting a practice which will produce results that are erroneous by a relatively material amount, we must decline the engagement even though there is precedent for the practice desired by the client." We create the second head of our monster when we ask for standards that absolutely do not reflect the underlying economics of transactions. I offer two prime examples. Leasing is first. We have accounting literature put out by the FASB with follow-on interpretative guidance by the accounting firms—hundreds of pages of lease accounting guidance that, I will be the first to admit, is complex and difficult to decipher. But it is due principally to people not being willing to call a horse a horse, and a lease what it really is—a financing. The second example is Statement 133 on derivatives. Some people absolutely howl about its complexity. And yet we know that: (1) people were not complying with the intent of the simpler Statements 52 and 80, and (2) despite the fact that we manage risk in business by managing values rather than notional amounts, people want to account only for notional amounts. As a result, we ended up with a compromise position in Statement 133. To its credit, Statement 133 does advance the quality of financial reporting. For that, I commend the FASB. But I believe that we could have possibly achieved more, in a less complex fashion, if people would have agreed to a standard that truly reflects the underlying economics of the transactions in an unbiased and representationally faithful fashion. I certainly hope that we can find a way to do just that with standards we develop in the future, both in the U.S. and internationally. It will require a change in how we approach standard setting and in how we apply those standards. It will require a mantra based on the fact that transparent, high quality financial reporting is what makes our capital markets the most efficient, liquid, and deep in the world.

In her notes compiled in 1979, Professor Linda Plunkett of the College of Charleston S.C., calls accounting the "oldest profession"; in fact, since prehistoric times families had to account for food and clothing to face the cold seasons. Later, as man began to trade, we established the concept of value and developed a monetary system. Evidence of accounting records can be found in the Babylonian Empire (4500 B.C.), in pharaohs' Egypt and in the Code of Hammurabi (2250 B.C.). Eventually, with the advent of taxation, record keeping became a necessity for governments to sustain social orders.
James deSantis, A BRIEF HISTORY OF ACCOUNTING: FROM PREHISTORY TO THE INFORMATION AGE --- http://www.ftlcomm.com/ensign/historyAcc/ResearchPaperFin.htm 

Origins of Double Entry Accounting are Unknown

• 1300s A.D. crusades opened the Middle East and Mediterranean trade routes
• Venice and Genoa became venture trading centers for commerce
• 1296 A.D. Fini Ledgers in Florence
• 1340 City of Massri Treasurers Accounts are in Double Entry form.
• 1494 Luca Pacioli's Summa de Arithmetica Geometria Proportionalita (A Review of Arithmetic, Geometry and Proportions)   

Recall that double entry bookkeeping supposedly evolved in Italy long before it was put into algebraic form in the book Summa by Luca Pacioli .  As a result the English term "Debit" really has a Latin origin.  

You can read the following at http://www.wikiverse.org/debit

**************
Debit is an accounting and bookkeeping term that comes from the Latin word debere which means "to owe." The opposite of a debit is a credit. Debit is abbreviated Dr while credit is abbreviated Cr.
**************

December 13, 2005 message from Robert Bowers [M.Robert.Bowers@WHARTON.UPENN.EDU]

In the 14th Century, the Phoenicians sent trading ships to Cathay (China) to trade for silk. Problem was, if a ship sank, the merchant prob sank (bankrupt) with it. So the merchants pooled their resources so if a ship sank no one merchant lost everything. Along with this, an Italian Count named Paole (seriously) set up a system of recordkeeping to keep track of the ventures. In this system, he created two registers, a Debit Register (DR), and a Credit Register (CR)

I'll bet 95% of all CPA's don't know that which makes me .... a trivia freak?

December 16, 2005  message from Robert B Walker [walkerrb@ACTRIX.CO.NZ]

Luca Pacioli did not invent double entry book-keeping. The rudiments of double entry book-keeping (DEBK) can be found in Muslim government administration in the 10th Century. (See Book-keeping and Accounting Systems in a tenth Century Muslim Administrative Office by Hamid, Craig & Clark in Accounting, Business & Financial History Vol 3 No 5 1995).

As I understand it Pacioli saw the technique being used by Arab traders and adapted and codified the technique allowing it to spread to Northern Europe where it became a* key component in Western economic dominance in the last 500 years.

This is logical if you think about it. DEBK is the greatest expression of applied algebra – that Arab word betraying the origin of the particular mathematical technique in which the world’s duality is reflected.

RW

* but not the key component as Werner Sombart would have it. But then his reason for wanting that to be was his extreme anti-semitism … but that is another story.

December 13, 2005 reply from Earl Hall [earl@PERSPLAN.COM]

From thefreedictionary.com

DR = Debit [Middle English debite, from Latin dbitum, debt; see debt.]

CR=Credit [French, from Old French, from Old Italian credito, from Latin crditum, loan, from neuter past participle of crdere, to entrust; see kerd- in Indo-European roots.]

Who am I to argue with a free dictionary? The answer is worth what I paid.

Accountancy and the da Vinci Code

April 12, 2007 message from Barry Rice [brice@LOYOLA.EDU] 

From the April 11 Brisbane Times:

Forgotten magic manual contains original da Vinci code
AFTER lying almost untouched in the vaults of an Italian university for 500 years, a book on the magic arts written by Leonardo da Vinci's best friend and teacher has been translated into English for the first time.

The world's oldest magic text, De viribus quantitatis (On the Powers of Numbers), was penned by Luca Pacioli, a Franciscan monk who shared lodgings with da Vinci.

Continued at http://www.brisbanetimes.com.au/articles/2007/04/10/1175971101054.html  .

E. Barry Rice, MBA, CPA
Director, Instructional Services
Emeritus Accounting Professor
Loyola College in Maryland
BRice@Loyola.edu
410-617-2478
www.barryrice.com 

Facebook me! http://www.facebook.com/p/Barry_Rice/20102311

The following is a controversial quotation from http://www.cbs.dk/staff/hkacc/BOOK-ART.doc 

"The power of double-entry bookkeeping has been praised by many notable authors throughout history. In Wilhelm Meister, Goethe states, "What advantage does he derive from the system of bookkeeping by double-entry! It is among the finest inventions of the human mind"... Werner Sombart, a German economic historian, says, "... double-entry bookkeeping is borne of the same spirit as the system of Galileo and Newton" and "Capitalism without double-entry bookkeeping is simply inconceivable. They hold together as form and matter. And one may indeed doubt whether capitalism has procured in double-entry bookkeeping a tool which activates its forces, or whether double-entry bookkeeping has first given rise to capitalism out of its own (rational and systematic) spirit".

If, for a moment, one considers the credibility crisis of practical accounting, it would be quite impossible to dismiss the following paradox: the conflict between the enthusiastic praise of the system's strength on the one hand, and on the other, the many financial failures in the real world. How can such a powerful system, even when applied meticulously, still result in disasters? Although it is hardly necessary to argue more in favour of double-entry book-keeping, I still want to underline the two qualities of the system which I find are valid explanations of the system's very important and world-wide role in financial development for five centuries.

The Logic of Double-Entry Bookkeeping, by Henning Kirkegaard
Department of Financial & Management Accounting 
Copenhagen Business School 
Howitzvej 60

Along this same double-entry thread I might mention my mentor at Stanford.
Nobody I know holds the mathematical wonderment of double-entry and historical cost accounting more in awe than Yuji Ijiri.  For example, see Theory of Accounting Measurement, by Yuji Ijiri (Sarasota:  American Accounting Association Studies in Accounting Research No. 10, 1975).  

Dr. Ijirii also extended the concept to triple-entry bookkeeping in (Sarasota:  Triple-Entry Bookkeeping and Income Momentum
American Accounting Association Studies in Accounting Research No. 18, 1982).
http://accounting.rutgers.edu/raw/aaa/market/studar.htm tm 

Also see the following:

• The History of Mathematics and Accounting by Mary Bellis at http://inventors.about.com/library/inventors/blmathmatics.htm 
• Luca Pacioli - Mathematics and the Liberal Arts --- http://math.truman.edu/~thammond/history/LucaPacioli.html 

Brush up your Shakespeare:  Medieval manuscripts to hit Internet
Stanford University Libraries, the University of Cambridge and Corpus Christi College, Cambridge, will make hundreds of medieval manuscripts, dating from the sixth through the 16th centuries, accessible on the Internet.
"Medieval manuscripts to hit Internet," Stanford Report, July 13, 2005 ---
http://news-service.stanford.edu/news/2005/july13/parker-071305.html

A summary of the medieval times and literature is available at http://en.wikipedia.org/wiki/Medieval

Brush up your Shakespeare:  Medieval manuscripts to hit Internet
Stanford University Libraries, the University of Cambridge and Corpus Christi College, Cambridge, will make hundreds of medieval manuscripts, dating from the sixth through the 16th centuries, accessible on the Internet.
"Medieval manuscripts to hit Internet," Stanford Report, July 13, 2005 ---
http://news-service.stanford.edu/news/2005/july13/parker-071305.html

A summary of the medieval times and literature is available at http://en.wikipedia.org/wiki/Medieval

May 28, 2005  reply from Barbara Scofield [scofield@GSM.UDALLAS.EDU]

Thank you for the notice about the availability of the medieval manuscripts on the Internet through the project Parker on the Web at Stanford University. Two manuscripts are currently available, and on page 11 of the English translation of Matthew Paris's "English History From 1235 to 1273" I have already found references to accounting (see below).

Accountants are still using the principle "under whatever name it may be called" and entities are still making up new names for inconvenient economic events in the hopes of avoiding full disclosure.

At this Catholic liberal arts university Shakespeare is modern, and the medieval world is revered, so I'm interested in gaining some insight into the medieval worldview.

Barbara W. Scofield, PhD, CPA
Associate Professor of Accounting
University of Dallas
1845 E. Northgate Irving, TX 75062
Braniff 262 scofield@gsm.udallas.edu 

Ancient Finance from Harvard Business School

From Jim Mahar's blog on May 17, 2006 --- http://financeprofessorblog.blogspot.com/

 

The HBS Working Knowledge site has an interesting article by William Goetzmann on financial instruments back in the time of the Romans and Greeks. For instance on checks:

...bankers' checks written in Greek on papyri appeared in ancient Egypt as far back as 250 B.C. Papyri preserved well in Egypt thanks to its arid climate, but Goetzmann thinks it's safe to say such checks changed hands throughout the Mediterranean world . . . So the whole tradition of bank checks predates the current era and has its roots at least in Hellenistic Greek times," he says.

Going Concern and Accrual Accounting Evolved in the 1500s

• Venture accounting over the life of a venture with interim statements evolved in The Netherlands
• 1673 Code of Commerce in France requires biannual balance sheet reporting  
• Charge and Discharge Agency Responsibility and Stewardship Accounting in English trust accounting

Limited liability Corporations (divorced professional management from ownership shares)

• 1555 A.D. Russia Company
• 1600 A.D. East India Company
• 1670 A.D. Hudson's Bay Company
• England's Joint Stock Companies Act of 1844 required depreciation accounting for railroads, mining, and manufacturing (although the concept of depreciation dates back to Roman times).

Speculation Fever
Fraud and corruption festered and grew with the trading of joint stock, especially after 1600 A.D.  The South Seas Company scandal (reporting stock sales as income and paying dividends out of capital) led to England's Bubble Act in 1720 A.D. that focused on misleading accounting practices that helped managers rip off investors, especially by crediting stock sales to income.

One of the earliest and probably the most famous accounting and investment scandal was the South Sea Bubble in 1720
From the Harvard University Business School
Sunk in Lucre's Sordid Charms: South Sea Bubble Resources in the Kress Collection at Baker Library --- http://www.library.hbs.edu/hc/ssb/

Free online textbooks, cases, and tutorials in accounting, finance, economics, and statistics --- http://www.trinity.edu/rjensen/ElectronicLiterature.htm#Textbooks

 

Laissez-Faire Accounting survived endless debates and scandals until the Great Depression in 1933

• Much of the debate focused on capital maintenance (e.g., failure to charge off depreciation and failure to provide for replacement of operating assets), but governments did not legally impose auditing requirements and serious GAAP until the U.S. securities laws in the early 1930s.  Accountants were vocal in reform movements, but governments were slow to react with legislation and courts failed to establish consistent GAAP.
• Creation of the SEC in an effort to regain public trust in financial reporting and equity investing.
• Many firms did have independent audits and conformed to the best GAAP traditions of the day (thereby giving some evidence that Agency Theory works sometimes.)  Agency theory hypothesizes that it is in the best interest of management to contract for protection of investors and avoid scandalous asymmetries of information.

After 1933, the AICPA and the SEC seriously attempted to generate accounting standards, enforce accounting standards, and provide academic justification for promulgated standards.

• ASRs of the SEC
• In a 3-2 vote the SEC followed George O. May's efforts to mandate external audits of securities traded across state lines in the U.S.
• 1939-1959 A.D.: Accounting standards were generated by the AICPA's Committee on Accounting Procedure (CAP) that issued Accounting Research Bulletins (51 ARBs) --- but the tendency was to overlook controversial issues such as off-balance sheet financing, public disclosure of management forecasts, price-level accounting, current cost accounting, and exit value accounting.  Controversial items avoided by the CAP included management compensation accounting, pension accounting, post-employment benefits accounting, and off balance sheet financing (OBSF).  The CAP did very little to restrain diversity of reporting.
• 1960-1972 A.D.:  Accounting standards in the U.S. were generated by the AICPA's Accounting Principles Board (APB) that had more members than the CAP and a mandate to attack more controversial reporting issues.  The APB attacked some controversial issues but often failed to resolve their own disputes on such issues as pooling versus purchase accounting for mergers.  
• 1972-???? A.D.  Accounting standards in the U.S. were, and still are, being generated by the Financial Accounting Standards Board (FASB) that has seven members, including required members from industry, academe, and financial analysts in addition to members from public accountancy.  FASB members must divorce themselves from previous income ties and work full time for the FASB.  The formation of the FASB was a desperation move by CPA's to stave off threatened takeover of accounting standards by the Federal Government (there were the Moss and Metcalf bills to do just that under pending legislation in the U.S. House and Senate).  Unlike the CAP and APB, the FASB has a full-time research staff and has issued highly controversial standards forcing firms to abide by pension accounting rules, capitalization of many leases, and booking of many previous OBSF items (capital leases, pensions, post-employment benefits, income tax accounting, derivative financial instruments, pooling accounting, etc.).  The road has been long and hard on some other issues where attempts to issue new standards (e.g., expensing of dry holes in oil and gas accounting and booking of employee stock options) have been thwarted by highly-publicized political pressuring by corporations.

History of the U.S. Financial Accounting Standards Board (FASB) and earlier accounting standard setting in the United States --- http://www.trinity.edu/rjensen/Theory01.htm#AccountingHistory

July 16, 2008 message from Brady, Joseph [bradyj@LERNER.UDEL.EDU]

I recommend the book “More than a numbers game – a brief history of accounting”, by Thomas A. King. Mr. King traces the development of our accounting standards, from the railroad accounting era through Enron. King describes the major accounting controversies in each era. The reader gains an understanding of the differing points of view – academic, management, enforcement, public accountants, internal accountants. King writes clearly and is a good story teller, so the pace of the book is fast.

I used the book in a senior level accounting systems course last semester, covering all 15 chapters in 3 weeks. It would be possible to go somewhat faster by jettisoning some chapters, without loss of continuity. I am sure that all my 80 students learned from the book, and most said they enjoyed learning some of the profession’s history. I liked it because it allowed me to challenge students to think about what the nature of our reporting system and of that system’s limitations. In their four years, our students learn a lot of techniques and rules; the book puts these into context and I liked the book for that reason, too.

Mr. King began his career in public accounting. He is now Treasurer of Progressive Insurance.

Joe Brady
Accounting & MIS
Lerner College of Business & Economics
University of Delaware

In 1973 the International Accounting Standards Committee (IASC) was formed and evolved into the International Accounting Standards Board IASC) in 1981.
A Timeline of development can be found at http://www.trinity.edu/rjensen/FraudRotten.htm#DerivativesFrauds
History of the International Accounting Standards Board (IASB) ---  http://www.iasb.org/About+Us/About+the+Foundation/History.htm
A more complete commentary on the history of the IASC and IASB by Paul Pacter --- http://www.trinity.edu/rjensen/acct5341/speakers/pacter.htm#001
lso see http://static.managementboek.nl/pdf/9780471726883.pdf

Some of the many, many lawsuits settled by auditing firms can be found at http://www.trinity.edu/rjensen/Fraud001.htm

Wow Online Accounting History Book (Free)
Thank you David A.R. Forrester for providing a great, full-length, and online book:
An Invitation to Accounting History --- http://accfinweb.account.strath.ac.uk/df/contents.html 
Note especially Section B2 --- "Rational Administration, Finance And Control Accounting:  the Experience of Cameralism" --- http://accfinweb.account.strath.ac.uk/df/b2.html 

Accounting history lecture worth noting --- http://newman.baruch.cuny.edu/digital/saxe/saxe_1978/baxter_79.htm

XBRL is no longer something we only play with in academe.  It is now available to investors around the world, although it may take a while for some companies to add the XBRL tags to their financial statements.  Some things that are now being done in XBRL such as time graphs and ratio graphs can be done with things other than XBRL.  What XBRL does, however, is make it possible to:

(1) Compare different companies in a Web browser

(2) Perform customized analyses if the XBRL statements are downloaded into Excel

(3) Conduct easy searches that do not yield thousands of unwanted and extraneous hits

Bob Jensen's New Video Tutorial on XBRL (about 30 minutes)
It's the XBRLdemos2005.wmv file at http://www.cs.trinity.edu/~rjensen/video/Tutorials/ 
But first read the following and watch the KOSDAQ video before watching the above video.

Question
What are the two most significant events in the history of accounting, financial reporting, and financial statement analysis? 

Answers
Double Entry Bookkeeping and XBRL

The origins of double entry bookkeeping are unknown.  It goes back over 100 years before Luca Pacioli  made it famous by algebraically describing it in the world's first algebra book called Summa written in 1494.  Pacioli's basic equation A=L+E simply shows how recorded asset values in total equal the double-entry sum of creditor liabilities plus owner equities in those assets.  For over 500 years accounting disputes mainly lie in defining the A, L, and E concepts and measuring them in financial statements.  Pacioli gave us the algebra without the crucial and operational definitions of terms.  Bob Jensen's brief summary of the history of accounting is at http://www.trinity.edu/rjensen//theory/00overview/theory01.htm

XBRL stands for eXtensible Business Reporting Language in XML that can now be interpreted by every Web browser such as Microsoft's Internet Explorer.  In the future, virtually every all academic disciplines such as Chemistry, Physics, and History will probably develop their own taxonomies for XML reporting on the Web.  Hence, we one day may have XCHEM, XPHYS, and XHIST eXtensible reporting languages. 

Whereas the famous HTML tags on data are not extensible and are more or less fixed in scope and time, XML extensible meta-tags will become the world's most popular way of creating customized "meta-tags" that attach to virtually every piece of Web data and describe attributes of each piece of data.  The history of data tags and meta-tags is briefly outlined at http://www.trinity.edu/rjensen/XBRLandOLAP.htm
I also highly recommend the XBRL history and news site at XBRL headquarters at http://www.xbrl.org/Home/

XBRL is a taxonomy for XML meta-tags to be placed on virtually every number in a set of financial statements.  For over a decade, efforts have been made by huge companies and accounting firms to develop standardized XBRL tags for key taxonomies in accounting.  These taxonomies may vary as to a particular set of accounting generally accepted accounting principles (GAAP) such as International GAAP or US GAAP.  Once a company or user selects which GAAP taxonomy to use, it's financial statements can be "marked up" with XBRL meta-tags that facilitate comparative financial statement analysis.  Users may also take any set of financial statements and add tags for a chosen set of GAAP tags.  For example, see Drag and Tag from Rivet Corporation --- http://www.rivetsoftware.com/
Also see http://www.xbrl.org/eu/CEBS-3/Rivet_Industry Day_Brussels_14 Sept 2005.pdf

Because adding XBRL meta-tags to a given set of financial statements is time consuming, most large companies are in the process of adding these tags to their own financial data so that investors will not have to do their own tagging.  The major stock exchanges of the world are now urging companies to send in their financial reports marked up in XBRL.  Soon they will require all listed companies to submit XBRL-tagged financial statements.

Bob Jensen's Old XBRL Video Tutorial called XBRLdemos.wmf
About four years ago (I can't remember exactly when) I prepared a XBRL tutorial on how to use XBRL in financial statement analysis.  The tutorial itself was actually developed by NASDAQ, Microsoft, and PwC in a NMP partnership.  NASDAQ selected 20 companies and marked up their financial statements in XBRL.  Microsoft wrote a fancy Excel program to analyze those financial statements in Excel.  PwC served up the data on the Web.  This NMP tutorial was intended to have a short life since the plan was eventually to use XBRL directly in Web browsers without having to use Excel.  Indeed, PwC no longer serves up this tutorial.  Bob Jensen probably has the only recorded history of this NMP tutorial on video in the file XBRLdemos.wfm at http://www.cs.trinity.edu/~rjensen/video/Tutorials/

Bob Jensen's New 2005 XBRL Video Tutorial called XBRLdemos2005.wmf
XBRL is now marked up on many financial statements on the Web and can be used for financial statement analysis in Web browsers.  I found a set of such statements for various (Star) companies on the Korean KOSDAQ stock exchange homepage. 

Before looking at my new video, I want you to first view the KOSDAQ Camtasia video at http://www.ubmatrix.com/solutions/WebHelp/KOSDAQDemo.html

After viewing this video, you can then go to my new Camtasia 2005 video XBRLdemos2005.wmv file at http://www.cs.trinity.edu/~rjensen/video/Tutorials/ 

My new video is mainly a tutorial about how I learned to use the XBRL financial statements made available by KOSDAQ for actual use by investors in companies listed on the KOSDAQ stock exchange.

In particular, my new video shows how to perform the following steps at the KOSDAQ site.

First Watch the http://www.ubmatrix.com/solutions/WebHelp/KOSDAQDemo.html Second Watch my XBRLdemos2005.wmv file at http://www.cs.trinity.edu/~rjensen/video/Tutorials/  The KOSDAQ homepage is at http://www.ubmatrix.com/home/default.asp             Go to http://km.krx.co.kr/      You do not have to install the Korean language pack      Note that it may take some time for the upper menu to appear      Click on the English button in the upper right corner after the menu appears Third Go directly to http://english.kosdaq.com/      Click on the "XBRL Service" on the right side of the screen      Click on a company's logo (ignore any pop ups to install a language pack)      If you do not see a graph on the left side of a company's report,              click on the button/instruction below the graph's border      After you see a graph,              click on the various financial statement line items to the right of the graph             (Your mouse pointer will now be a small bar graph) Go to the bottom of the page and click on "Ratios"      If your pointer is still a small graph,              click on the ratios that you want to see in the graph      Go to the bottom of the page and click on "Comparison"      Options for comparisons are given (they are also demonstrated in my video)      Go to the bottom of the page and read about the Excel Analyzer       See what you can download if you really get interested in the analysis options

October 30, 2005 reply from Deborah Johnson [Finance@WeFightFraud.com]

I followed the instructions you plan to give your students for Monday and found a few bugs you might want to know about.

The Demos link at XBRL.org  is not on the home page. They need to know that this site requires them to navigate to "Showcase" to find the Demo.

http://km.krx.co.kr/   selected English and then XBRL Services, then chose the company. The graph is only available if you agree to download and install additional software on your PC. If they do not have administrator rights, this is not going to be an option for your students. (say on college lab and classroom computers).

The company I selected, LG Micron, had an obvious defect in the financial data being presented for this demonstration. XBRL is clearly not going to minimize any human mistakes, and the printed financials will still have to be carefully scrutinized by management and the auditors. Do the math on the Trade Receivables at Net. Demerits for any student who doesn't find the error. If you go to the bottom of the table and select "Get these financials in XBRL" you may get an XML Parsing Error. This is probably a higher version of XMl required, and again the student would need administrator rights to upgrade the software or install patches and plug ins.

Regards,

Deborah Johnson

October 30, 2005 reply from Bob Jensen

Hi Deborah,

I agree with all your points and thank you for providing some clarifications.  With respect to needing administrative rights to view the graphs (say on college lab computers and on classroom computers), it behooves faculty to ask administrators to install the software that can be downloaded free by clicking below the graph frame for any company in the demo.

If students do not have administrative rights on a college lab or classroom computer, I guess this makes my video tutorial even more valuable since students can see what will happen if they try this on their own computers where they automatically have administrative rights.

Thanks,

Bob

From the Publisher of the AccountingWeb on June 19, 2008

Some friends of ours are currently on vacation in Russia, which got me to thinking, "I wonder what it's like to be an accountant in Russia?" I have no idea. It wasn't all that long ago that International Financial Reporting Standards were adopted by the Russian Finance Ministry, so it's probably been a rather challenging profession as of late! If you have any first-hand knowledge of accounting in the Russian Federation, please e-mail me so we can share it with AccountingWEB readers.

In the meantime, here are some key Russian facts:

• Population: 142 million
• Largest city (and capital): Moscow
• Second largest city:
  St. Petersburg
• Size: the largest country in the world by more than 2.5 million square miles
• Ethnic groups:
  Russian 79.8%,
  Tatar 3.8%,
  Ukrainian 2%,
  other 14.4%

Rob Nance
Publisher
AccountingWEB, Inc.
publisher@accountingweb.com

Bob Jensen's reply to Rob Nance

Hi Rob,

A better question is to ask what accounting became in Russia after the breakup of the Soviet Union --- http://www.worldbank.org/html/prddr/trans/janfeb99/pgs22-25.htm
The system is highly geared to tax reporting and has a long ways to go relative to IFRS.

Accounting in the former Soviet Union was pretty much an exercise in tabulating fiction --- http://www.questia.com/PM.qst?a=o&d=6827120

Accounting was an instrument of the planning and control process that substituted for market-based controls ---
http://www.blackwell-synergy.com/doi/abs/10.1111/j.1467-6281.1974.tb00002.x?cookieSet=1&journalCode=abac

Russia now has offices of the Big 4 accounting firms and maybe other Western CPA firms as well. One of my former students accepted a transfer to the PwC office in Moscow. It proved to be a fast-track to becoming a partner in PwC. Russian companies are seeking equity investors throughout the world, and to do so they have to add accounting assurances much like the other companies in the global economy seek assurances.

KPMG has a publication comparing IFRS with Russian GAAP --- http://snipurl.com/russiangaap 
Also see http://www.kpmg.ru/index.thtml/en/services/assurance/IFRS/IFRSpublications/

PwC has an IFRS Transition document at http://www.pwc.com/extweb/service.nsf/docid/90828387207B28F78025717B0038B2AD
Results of a 2006 survey are reported at http://snipurl.com/russiangaapsurvey

Deloitte links to a Russian translation of IFRS as well as providing information on transitioning to IFRS in Russia --- http://www.iasplus.com/country/russia.htm

A illustrative Russian set of financial statements can be found at http://www.dixy.ru/en_invest-report/

Hope this helps!

Bob Jensen

Bob Jensen's threads on GAAP comparisons (with particular stress upon derivative financial instruments accounting rules) are at http://www.trinity.edu/rjensen/caseans/canada.htm
The above site also links to more general GAAP comparison guides between nations.

International Standards from the IASB --- Click Here
IASB homepage--- http://www.iasb.org/Home.htm 

U.S. Standards from the FASB (Free Downloads) --- http://www.fasb.org/public/ 
FASB homepage --- http://www.fasb.org/

Management Accounting Standards from the IMA (Free Downloads) --- http://www.imanet.org/publications_statements.asp#C
IMA homepage --- http://www.imanet.org/

Bob Jensen's summary of accounting theory and controversies --- http://www.trinity.edu/rjensen//theory/00overview/theory01.htm

"Global Finance Leaders Release Comprehensive Proposals to Strengthen the Financial Industry and Financial Markets," Institute for International Finance, July 17, 2008 --- http://www.iif.com/press/press+75.php

The world’s leading financial services firms today released a far-reaching report 1 detailing best practice reforms for the industry. The report represents the global industry’s response to the turmoil in financial markets that was triggered by the U.S. subprime mortgage market crisis in mid-2007. Today’s 200-page report is published by the Institute of International Finance, the association of leading financial services firms with more than 380 members across the world. The report proposes Principles of Conduct together with Best Practice Recommendations on critical issues such as risk management, compensation policies, valuation of assets, liquidity management, underwriting and the rating of structured products as well as boosting transparency and disclosure

Comparison of IFRSs and US GAAP (Educators can provide free copies to students) --- http://www.iasplus.com/dttpubs/0703ifrsusgaap.pdf
Comparisons for other nations --- http://www.iasplus.com/country/compare.htm

From IAS Plus on March 14, 2007 --- http://www.iasplus.com/dttpubs/0703ifrsusgaap.pdf

Deloitte's IFRS Global Office has published a new Comparison of International Financial Reporting Standards and United States GAAP (PDF 208k, 36 pages) as of 28 February 2007. While this comparison is comprehensive, it does not attempt to capture all of the differences that exist or that may be material to a particular entity's financial statements. Our focus is on differences that are commonly found in practice. The significance of the differences enumerated in this pubilcation – and others not included – will vary with respect to individual entities depending on such factors as the nature of the entity's operations, the industry in which it operates, and the accounting policy choices it has made. We are pleased to grant permission for accounting educators and students to make copies for educational purposes.

Main News Site for International Accounting Happenings --- http://www.iasplus.com/index.htm 

KEY GROUPS

EFRAG

Europe

IFAC

IOSCO

US FASB

US SEC

US PCAOB

RESOURCES Past News by Month Reference Materials Statistics Database IFRS in Europe by 2005 UK Web-based IFRS Updates Country/Region Use of IFRSs IAASB Auditing Standards Public Sector Standards

TOOLS 11-Year Calendar Currency Converter Loan Amortisation News Headlines Stock Market Indexes Telephone Codes Unit Conversions World Electric Guide World Phone Guide World Time Clock Worldwide Weather

DELOITTE'S IASPLUS WEBSITE About IASPlus Terms for Use Privacy Policy Abbreviations IAS Plus Spanish IAS Plus German

Paul Pacter and Deloitte provide a statistical database (with data about international accounting) at http://www.iasplus.com/stats/stats.htm

International Financial Reporting Standards (IFRS) Summary --- http://www.iasplus.com/standard/standard.htm

Use of IFRS varies by nation --- http://www.iasplus.com/country/useias.htm 

If you click on the Search tab and enter something like (IFRS AND China) to compare IFRS with the domestic standards of a given nation --- http://www.iasplus.com/index.htm

Question
Will the U.S. adopt all IFRS international standards while the European Union cherry picks which standards it will adopt?

From The Wall Street Journal Accounting Weekly Review on April 27, 2007

"SEC to Mull Letting U.S. Companies Use International Accounting Rules," by David Reilly, The Wall Street Journal, Page: C3 --- http://snipurl.com/WSJ0425

TOPICS: Accounting, Financial Accounting, Financial Accounting Standards Board, Securities and Exchange Commission

SUMMARY: The article describes the SEC's willingness to consider allowing U.S. companies to use USGAAP or International Financial Reporting Standards (IFRS) in their filings. This development stems from the initiative to allow international firms traded on U.S. exchanges to file using IFRS without reconciling to USGAAP-based net income and stockholders' equity as is now required on Form 20F. "SEC Chairman Christopher Cox said the agency remains committed to removing the reconciliation requirement by 2009. Such a move was the subject of an SEC roundtable and is being closely watched by European Union officials." The SEC will accept comments this summer on its proposal to eliminate the reconciliation requirements. If the agency does implement this change, then it will consider allowing U.S. companies the same alternative.

QUESTIONS:
1.) What is a "foreign private issuer" (FPI)? Summarize the SEC's current filing requirements for these entities.

2.) Why is the SEC considering allowing U.S. companies to submit filings under IFRS rather than U.S. GAAP?

3.) Why might the SEC's decision in this matter "spell the demise of USGAAP"?

4.) Define "principles-based standards" and contrast with "rules-based standards." Give an example in either USGAAP or IFRS requirements for each of these items.

5.) "Some experts don't think a move away from U.S. GAAP would necessarily be bad." Who do you think would hold this opinion? Who would disagree? Explain.

6.) Define the term convergence in relation to global standards. Who is working towards this goal?

Reviewed By: Judy Beckman, University of Rhode Island

Jensen Comment
Canada has already decided to adopt the IFRS in place of domestic Canadian standards.

Also see ""Strengthening the Transatlantic Economy," by José Manuel Barroso (European Commission President), April 27, 2007 --- http://www.iasplus.com/europe/0704barroso.pdf

Also don't assume that the European Union automatically adopts each IASB international standard. For example, the EU may not adopt IFRS 8 --- http://www.iasplus.com/standard/ifrs08.htm

"Is IFRS Compatible with U.S.-Style Corporate Governance?" by Tom Selling, The Accounting Onion, December 10, 2007 --- http://accountingonion.typepad.com/theaccountingonion/2007/12/is-ifrs-compati.html

I just finished reading a brief, highly readable and interesting article by a Columbia Law School professor, John C. Coffee, Jr., entitled A Theory of Corporate Scandals: Why the U.S. and Europe Differ.*  The purpose of this post is to piggyback on his framework to also provide an explanation for the difference in basic approaches between U.S. GAAP and IFRS; and most importantly, why political pressure to trash U.S. GAAP and adopt IFRS should be resisted. 

How and Why, According to Coffee, U.S. and European Scandals Differ

Coffee's thesis is that corporate governance of majority-owned corporations (predominant in Europe) should be fundamentally different than corporate governance of corporations that lack a controlling shareholder group (predominant in the U.S.). It's not necessarily because there are fewer incentives to rip off other shareholders, but the feasible means to do so will differ.

Scandals in Europe involving majority-owned corporations usually do not feature an accounting manipulation. First, financial reporting is less important to the majority owners because they rarely sell shares; and if they do, they usually receive a control premium that is uncorrelated with recent earnings (and generally larger than control premia in U.S. transactions).  Second, fraud is more easily accomplished by misappropriation of the private benefits of control: authorization of related-party transactions at advantageous prices, below-market tender offers, are prime examples.  Any trading that takes place between minority owners has less to do with recent earnings reports, and more to do with an assessment of how minority shareholders will be treated by controlling interests. 

In dispersed-ownership corporations, managers do not possess private benefits of control.  Moreover, a significant portion of manager's compensation may be in the form of stock options or other forms of equity.  Therefore, stock price can have a significant effect on a manager's compensation, providing them with strong incentives to manipulate accounting earnings.

The Implications for Accounting

Professor Coffee's thesis is that differences in ownership patterns have important implications for the selection of gatekeepers: auditors, analysts, independent directors, etc.  His observations and recommendations are interesting, but I want to advance a related thesis, namely that different ownership patterns call for different types of accounting regimes. 

It stands to reason that accounting should be difficult to manipulate, if it can be used to rip off shareholders.  Thus, the evolution of U.S. GAAP can be seen as a response to the need for specific rules that minimized the role of management judgment because of their strong self-interest in the reported earnings and financial position.  This has occurred in part because U.S. gatekeepers have shown themselves to often lack sufficient resolve or power to prevent management from under-reserving, overvaluing, or just plain ole making up numbers.  U.S. managers effectively control the "independent" directors and auditors; and prior to Regulation FD, analysts bartered glowing assessment in exchange for tidbits inside information.  Without empowered gatekeepers to prevent accounting fraud, we have had to place our hopes on very inflexible accounting rules, and sheriffs like the SEC and private attorneys to catch the cases where management has attempted to surreptitiously cross the bright line.

Thus, it should be self-evident that IFRS-style accounting, replete with gray areas, would be a gift to U.S. managers.  Outright fraud would be replaced by more subtle means of "earnings management," rendering the SEC and private attorneys much less potent. Is it any wonder why U.S. corporations and their auditors are practically begging to have IFRS available to them? 

In short, it would be a grave mistake to adopt IFRS in the U.S. simply because it seems to work well elsewhere.  As corporate ownership patterns in Europe change, it may well be that IFRS may evolve to look more like U.S. GAAP.  Only after that occurs may it make more sense to have a single worldwide financial reporting regime.      

Imagine if Enron Had Applied IFRS

One of the scapegoats of the Enron scandal was "rules-based"  U.S. GAAP. The libel was that Andrew Fastow was a mad genius, capable of walking an accounting tightrope by creating complex special-purpose entities (SPEs).  But, GAAP wasn't the culprit in the Enron scandal. Frustrated Fastow was only able to get the accounting treatment he needed past the auditors by hiding from them side agreements that unwound critical provisions requiring the new investors to have a sufficient amount of capital at risk in the SPEs. 

The enduring legacy of the libel is the erroneous conventional wisdom that GAAP is responsible for Enron; and what's more, Enron et. al. might not have happened if our financial reporting system were more like IFRS.  More likely, if IFRS had been the basis of accounting for Enron instead of GAAP, it might have taken longer to discover the fraud, or to pin the blame for the fraud where it belonged.

Neither GAAP nor IFRS are principles-based, but GAAP certainly has more rules and bright lines.  At least there seems to be some method to the madness, but it would be nice if more of the rules were based on sound principles. 

-------------------------------

*There are two versions of this paper.  The working paper is available at no charge from the Social Sciences Research Network electronic library at http://ssrn.com/abstract=694581.  The published version is in Oxford Review of Economic Policy, Vol. 21, No. 2 (2005).

 

Bob Jensen's threads on the differences between U.S. versus International GAAP are at http://www.trinity.edu/rjensen/Theory01.htm#FASBvsIASB

iGAAP (International GAAP) 2007 Financial Instruments: IAS 32, IAS 39 and IFRS 7 Explained (Third Edition)
Deloitte & Touche LLP (United Kingdom) has developed iGAAP 2007 Financial Instruments: IAS 32, IAS 39 and IFRS 7 Explained (Third Edition), which has been published by CCH. This publication is the authoritative guide for financial instruments accounting under IFRSs. The 2007 edition expands last year's edition with further interpretations, examples, discussions from the IASB and the IFRIC, updates on comparisons of IFRSs with US GAAP for financial instruments, as well as a new chapter on IFRS 7 Financial Instruments Disclosures including illustrative disclosures. iGAAP 2007 Financial Instruments: IAS 32, IAS 39 and IFRS 7 Explained (628 pages, March 2007) can be purchased through CCH Online or by phone at +44 (0) 870 777 2906 or by email: customer.services@cch.co.uk .
IAS Plus, March 24, 2007 --- http://www.iasplus.com/index.htm

Bob Jensen's tutorials on IAS 39 (Derivative Financial Instruments) are linked at http://www.trinity.edu/rjensen/caseans/000index.htm

CPA Examination candidates and accounting faculty should check out the free database at
http://www.cpa-exam.org/cpa/literature.htm

The Trinity University library has a single-user license (with an academic discount) for PwC’s Comperio --- http://www.pwcglobal.com/comperio
The single-user limitation really has not been problematic for us. Our Library guru wrote some front end code that lets any Trinity faculty member or student go directly into Comperio without having to remember a password

Comperio evolved out of a CD-Rom database that Price Waterhouse  sold under the name “Price Waterhouse Researcher.” Updated CDs were sent to us each quarter in the old days before things were as networked on the Web. Now it’s all Comperio on the Web.

Andersen had a competing CD database called Research Manager. That was bought out after Andersen fell, but I think it is now defunct (I could be wrong about this).

Now Comperio is the main commercial database available other than FARs --- http://www.fasb.org/fars/
I think each student can buy this from Wiley, but there have been numerous complaints about it.

PwC's Comperio Accounting Research Manager

Comperio is the most comprehensive on-line library of financial reporting and assurance literature in the world. Over 1,500 financial executives from around the world use Comperio on a daily basis. Comperio content includes AICPA, DIG, EITF, FASB, IAS, ISB and the SEC as well as pronouncements and standards from Australia, Belgium, Canada, New Zealand and the United Kingdom.

With Comperio, the answers you need are always available - right now, right at your fingertips. There is no software to install - just go to the Comperio website and start researching!

The entire online library can be immediately accessed by browsing a pronouncement or topic directly, or by searching the entire database for key words, topics or terms.

Visit the Comperio product information site at http://www.pwcglobal.com/comperio . You will find the necessary forms to order Comperio today or to request a 30-day free trial.

Andersen's old Accounting Research Manager is now updated and maintained by CCH. The AICPA has accounting research literature in the FARs database.

For national and international accounting rulings and online research, it is best to subscribe for a fee to one of the leading services shown below:

PwC Comperio --- http://www.pwcglobal.com/comperio

CCH Accounting Research Manager --- http://www.accountingresearchmanager.com/ARMMenu.nsf/vwHTML/ARMSplash?OpenDocument

AICPA FARs (marketed by Wiley) --- http://www.fasb.org/fars/

For looking up filings with the SEC, there are two major sources:

EDGAR --- http://www.sec.gov/edgar/quickedgar.htm

PwC EdgarScan --- http://edgarscan.pwcglobal.com/servlets/edgarscan 

It is possible to do comparative company financial analyses using the core earnings databases --- http://www.trinity.edu/rjensen//theory/00overview/theory01.htm#CoreEarnings

Many IFRS and multiple nation standards and reviews are available from Deloitte's IAS Plus --- http://www.iasplus.com/index.htm

Free International Auditing Standards
All documents issued by IFAC and the International Auditing and Assurance Standards Board (IAASB) are now available for immediate download at no charge. Visitors must simply fill out a one-time registration to gain access to the documents. http://www.accountingweb.com/item/96952 

PwC has a new helper comparing U.S. GAAP with international (IFRS) GAAP --- http://www.pwc.com/extweb/pwcpublications.nsf/docid/74d6c09e0a4ee610802569a1003354c8

Download: Similarities and Differences - A comparison of IFRS and US GAAP (2005 update) [PDF file, 469k]

Download: Similarities and Differences - A comparison of IFRS and US GAAP (2004) [PDF file, 314k]

Download: publication order form [PDF file, 212k]

Other publications in the Similarities and Differences series are also available.

Updated in 2005:  Some Key Differences Between IFRs and U.S. GAAP -

Convergence of foreign and domestic accounting rules could catch some U.S. companies by surprise
Although many differences remain between U.S. generally accepted accounting principles (GAAP) and international financial reporting standards (IFRS), they are being eliminated faster than anyone, even Herz or Tweedie, could have imagined. In April, FASB and the IASB agreed that all major projects going forward would be conducted jointly. That same month, the Securities and Exchange Commission said that, as soon as 2007, it might allow foreign companies to use IFRS to raise capital in the United States, eliminating the current requirement that they reconcile their statements to U.S. GAAP. The change is all the more remarkable given that the IASB was formed only four years ago, and has rushed to complete 25 new or revamped standards in time for all 25 countries in the European Union to adopt IFRS by this year. By next year, some 100 countries will be using IFRS. "We reckon it will be 150 in five years," marvels Tweedie. "That leaves only 50 out."
Tim Reason, "The Narrowing GAAP:  The convergence of foreign and domestic accounting rules could catch some U.S. companies by surprise," CFO Magazine December 01, 2005 ---
http://www.cfo.com/article.cfm/5193385/c_5243641?f=magazine_coverstory

Monumental Scholarship (The following book is not online.)
The Early History of Financial Economics 1478-1776
by Geoffrey Poitras (Simon Fraser University) --- http://www.sfu.ca/~poitras/photo_pa.htm 
(Edward Elgar,  Cheltenham, UK, 2000) --- http://www.e-elgar.co.uk/ 

Jack Anderson sent the following message:

A good book on accounting history in the U.S. is

A History of Accountancy in the United States by Gary John Previts and  Barbara Dubis Merino

 

It's available through The Ohio State University Press (see web site

http://www.ohiostatepress.org/cat97/previts.htm )

 

I'm unaware of a good history of international accounting but would like to hear of one.

 

Jack Anderson

 

The FASB's website is at http://www.iasb.org/ 

• The FASB added Concepts and Standards at an unprecedented rate.
• FASB standards have become increasingly complex and cause a great deal of confusion among both preparers and users of financial statements.  The most dramatic example is the almost-incomprehensible FAS 133 on Accounting for Derivative Instruments.  In fairness, however, it should be noted that industry has brought on a lot of its own troubles with almost-incomprehensible financing and employment contracts (many of which are designed for the main purpose of getting around having to book and/or disclose expenses and debt).
• The FASB has focused much more on the balance sheet than on the income statement.  Over one third of the standards deal with industry OBSF schemes.
• The FASB does take costs into consideration as well as benefits of its accounting standards.  For example, after studying investor use of FAS 33 requiring supplemental statements on price-level adjusted statements and current cost statements, the FASB rescinded FAS 133.
• The FASB also issued a costly and controversial set of Accounting Concepts.  After some dormancy, the FASB is once again adding to these concepts with its first new concepts statement in over 16 years (Present Value Based Measurements and Fair Value).  Trinity University students may read about this at J:\courses\Acct5341\readings\Present Value-Based Measurements and Fair Value.htm.  

The future of the FASB and all national standard setters is cloudy due to the globalization of business and increasing needs for international standards.  The primary body for setting international standards was the International Accounting Standards Committee (IASC) that evolved into the International Accounting Standards Board (IASB) having a homepage at http://www.iasc.org.uk/  For a brief review of its history and the history of its standards, I recommend going to http://www.trinity.edu/rjensen/acct5341/speakers/pacter.htm#003.04.

In 2001, the IASC was restructured into the new and smaller International Accounting Standards Board (IASB).  The majority of the IASB members will be full-time, whereas the members of the IASC were only part-time and did not have daily face-to-face encounters with other Board members or the IASC staff.  The IASB will operate more like the FASB in the U.S.  

In the early years of its existence, the IASC tended to avoid controversial issues and there was nothing to back up its standards (except in the U.S. where lawyers will use almost anything to support litigation brought by investors against corporations).  

Times are changing at the IASC.  It has been restructured and is getting a much greater budget for accounting research.  Most importantly, IASC standards are becoming the standards required by large international stock exchanges (IOSCO).

The Global Reporting Initiative (GRI) was established in late 1997 with the mission of developing globally applicable guidelines for reporting on the economic, environmental, and social performance, initially for corporations and eventually for any business, governmental, or non-governmental organisation (NGO). Convened by the Coalition for Environmentally Responsible Economies (CERES) in partnership with the United Nations Environment Programme (UNEP), the GRI incorporates the active participation of corporations, NGOs, accountancy organisations, business associations, and other stakeholders from around the world business plan --- http://www.globalreporting.org/ 

Jagdish Gangolly recommends the following book:
Dollars & scholars, scribes & bribes: The story of accounting by Gary Giroux # Dame Publications, Inc (1996) # ASIN: B0006R6WQS --- http://snipurl.com/Giroux  

Jim McKinney recommends the following book;
It is not a lot more recent but I would consider the US centric text: A History of Accountancy in the United States: The Cultural Significance of Accounting by Previtz & Merino published in 1998. It is available in paperback.

SHARPEN YOUR UNDERSTANDING OF THE (2005) YEAR'S FINANCIAL REPORTING STANDARDS AND DEVELOPMENTS --- http://accountingeducation.com/index.cfm?page=newsdetails&id=141776

Accounting Research Versus the Accountancy Profession

Perhaps I'm old and tired, but I always think that the chances of finding out what really is going on are so absurdly remote that the only thing to do is to say hang the sense of it and just keep yourself occupied.
Douglas Adams

There are two explanations one can give for this state of affairs here. The first is due to the great English economist Maurice Dobb according to whom the theory of value was replaced in the United States by theory of price. May be, the consequence for us today is that we know the price of everything but perhaps the value of nothing. Economics divorced from politics and philosophy is vacuous. In accounting, we have inherited the vacuousness by ignoring those two enduring areas of inquiry.
Professor Jagdish Gangolly, SUNY Albany

The second is the comment that Joan Robinson made about American Keynsians: that their theories were so flimsy that they had to put math into them. In accounting academia, the shortest path to respectability seems to be to use math (and statistics), whether meaningful or not.
Professor Jagdish Gangolly, SUNY Albany

Rough notes of David Dennis from an informal panel of veteran accounting researchers at the American Accounting Association annual meetings in 2007 --- http://www.trinity.edu/rjensen/Dennis2007.htm

This citation was forwarded by Don Ramsey
"Why business ignores the business schools," by Michael Skapinker, Financial Times, January 7, 2008

Chief executives, on the other hand, pay little attention to what business schools do or say. As long ago as 1993, Donald Hambrick, then president of the US-based Academy of Management, described the business academics' summer conference as "an incestuous closed loop", at which professors "come to talk with each other". Not much has changed. In the current edition of The Academy of Management Journal.

. . .

They have chosen an auspicious occasion on which to beat themselves up: this year is The Academy of Management Journal's 50th anniversary. A scroll through the most recent issues demonstrates why managers may be giving the Journal a miss. "A multi-level investigation of antecedents and consequences of team member boundary spanning behaviour" is the title of one article.

Why do business academics write like this? The academics themselves offer several reasons. First, to win tenure in a US university, you need to publish in prestigious peer-reviewed journals. Accessibility is not the key to academic advancement.

Similar pressures apply elsewhere. In France and Australia, academics receive bonuses for placing articles in the top academic publications. The UK's Research Assessment Exercise, which evaluates university research and ties funding to the outcome, encourages similarly arcane work.

But even without these incentives, many business school faculty prefer to adorn their work with scholarly tables, statistics and jargon because it makes them feel like real academics. Within the university world, business schools suffer from a long-standing inferiority complex.

The professors offer several remedies. Academic business journals should accept fact-based articles, without demanding that they propound a new theory. Professor Hambrick says that academics in other fields "don't feel the need to sprinkle mentions of theory on every page, like so much aromatic incense or holy water".

Others talk of the need for academics to spend more time talking to managers about the kind of research they would find useful.

As well-meaning as these suggestions are, I suspect the business school academics are missing something. Law, medical and engineering schools are subject to the same academic pressures as business schools - to publish in prestigious peer-reviewed journals and to buttress their work with the expected academic vocabulary.

The schism between academic research and the business world: 
The outside world has little interest in research of the business school professors
If our research findings were important, there would be more demand for replication of findings

"Business Education Under the Microscope:  Amid growing charges of irrelevancy, business schools launch a study of their impact on business,"
Business Week, December 26, 2007 --- http://www.businessweek.com/bschools/content/dec2007/bs20071223_173004.htm 

The business-school world has been besieged by criticism in the past few months, with prominent professors and writers taking bold swipes at management education. Authors such as management expert Gary Hamel and Harvard Business School Professor Rakesh Khurana have published books this fall expressing skepticism about the direction in which business schools are headed and the purported value of an MBA degree. The December/January issue of the Academy of Management Journal includes a special section in which 10 scholars question the value of business-school research.

B-school deans may soon be able to counter that criticism, following the launch of an ambitious study that seeks to examine the overall impact of business schools on society. A new Impact of Business Schools task force convened by the the Association to Advance Collegiate Schools of Business (AACSB)—the main organization of business schools—will mull over this question next year, conducting research that will look at management education through a variety of lenses, from examining the link between business schools and economic growth in the U.S. and other countries, to how management ideas stemming from business-school research have affected business practices. Most of the research will be new, though it will build upon the work of past AACSB studies, organizers said.

The committee is being chaired by Robert Sullivan of the University of California at San Diego's Rady School of Management, and includes a number of prominent business-school deans including Robert Dolan of the University of Michigan's Stephen M. Ross School of Business, Linda Livingstone of Pepperdine University's Graziado School of Business & Management, and AACSB Chair Judy Olian, who is also the dean of UCLA's Anderson School of Management. Representatives from Google (GOOG) and the Educational Testing Service will also participate. The committee, which was formed this summer, expects to have the report ready by January, 2009.

BusinessWeek.com reporter Alison Damast recently spoke with Olian about the committee and the potential impact of its findings on the business-school community.

There has been a rising tide of criticism against business schools recently, some of it from within the B-school world. For example, Professor Rakesh Khurana implied in his book From Higher Aims to Hired Hands (BusinessWeek.com, 11/5/07) that management education needs to reinvent itself. Did this have any effect on the AACSB's decision to create the Impact of Business Schools committee?

I think that is probably somewhere in the background, but I certainly don't view that as in any way the primary driver or particularly relevant to what we are thinking about here. What we are looking at is a variety of ways of commenting on what the impact of business schools is. The fact is, it hasn't been documented and as a field we haven't really asked those questions and we need to. I don't think a study like this has ever been done before.

Continued in article

Bob Jensen's threads on the growing irrelevance of academic accounting research are at http://www.trinity.edu/rjensen/Theory01.htm#DoctoralPrograms

The dearth of research findings replications --- http://www.trinity.edu/rjensen/Theory01.htm#Replication

Bob Jensen's threads on higher education controversies are at http://www.trinity.edu/rjensen/HigherEdControversies.htm

January 2, 2008 reply from David Albrecht [albrecht@PROFALBRECHT.COM]

Bob,

AACSB chair Judy Olian (dean, UCLA school of biz) is quoted as saying that 39% of Fortune 500 CEOs are graduates of a businesss school.

I am surprised that this is such a low number. Why shouldn't this number be very much higher? Given that corporations are run by professional managers, why wouldn't the college degree that prepares professional managers show up with greater frequency in the profile of the top professional managers?

I don't know how it is possible for this group of deans to design a research study to show the relevance of business school education. Well, I don't know how it would be possible for anyone to design it. Isn't relevance a judgment call?

David Albrecht

January 2, 2008 reply from Bob Jensen

Hi David,

CEOs rise up from many walks of life, especially engineering, economics, law, and the specialties of an industry such as chemistry, medicine, agriculture, etc. CFOs and CAOs are another matter entirely.

As far as research impacts are determined, subjective judgment is certainly a huge factor but there are other indicators. Can executives recall a single article published in The Accounting Review or other leading academic accounting journal upon which academic reputations are built? Can executives name one author who received the AAA Seminal Contributions Award or any other academic award of major academic associations?

One indicator in accounting is practitioner membership in the American Accounting Association. The AAA started out as primarily an association for accounting practitioners and teachers of accounting. For four decades practitioners were heavily involved in the AAA and the longest-running editor of The Accounting Review was a practitioner (Kohler) --- http://snipurl.com/aohkohler 

All this changed with what Jean Heck and I call the "perfect storm" of the 1960s. Since then, practitioner membership steadily declined in the AAA and readership of academic accounting research journals plummeted to virtually zero. Practitioners still send us their money and their recruiters, but leading academic researchers like Joel Demski warn against accounting researchers catching a "vocational virus" and cringe at aiming our research talent toward practical problems of the profession for which we seemingly have no comparative advantage due to our rather useless accountics skills.

You can read much of the history of this schism at http://www.trinity.edu/rjensen/Theory01.htm#AcademicsVersusProfession 

The schism is probably greatest in accounting and the smallest in finance where there practitioners have relied more on research findings and fads in economics and finance journals.

Some universities are more focused on industry than others. Harvard certainly has tried very hard in this regard, but Harvard's case method research just cannot pass the hurdles of the journal referees of our leading accounting research journals.

And even accounting academics are bored with the (yawn) articles appearing in our academic research journals. Ron Dye is probably one of our most esoteric accountics researchers (his degrees are in mathematics and economics even though he's an "accounting professor"). Ron stated the following at http://www.trinity.edu/rjensen/Theory01.htm#AcademicsVersusProfession 

Begin Quote from Ron Dye***************

About the question: by and large, I think it is a mistake for someone interested in pursuing an academic career in accounting not to get a phd in accounting. If you look at the "success" stories, there aren't many: most of the people who make a post-phd transition fail. I think that happens for a couple reasons. 1. I think some of the people that transfer late do it for the money, and aren't really all that interested in accounting. While the $ are nice, it is impossible to think about $ when you are trying to come up with an idea, and anyway, you're unlikely to come up with an idea unless you're really interested in the subject. 2. I think, almost independent of the field, unless you get involved in the field at an early age, for some reason it becomes very hard to develop good intuition for the area - which is a second reason good problems are often not generated by "crossovers."

The bigger thing - not related to the question you raise - but maybe you could add to the discussion is that there are, as far as I can tell, not a lot of new ideas being put forth by anyone in accounting nowadays (with the possible exception of John Dickhaut's neuro stuff). In most fields, the youngsters are supposed to come up with the new problems, techniques, etc., but I see a lot more mimicry than innovation among newly minted phds now.

Anyway, for what it's worth....

Ron
End Quote from Ron Dye****************

_________________

Perhaps the AACSB can make some progress toward bridging the schism. But I leave you with a forthcoming quote in the January 6 edition of Tidbits:

Question "How many professors does it take to change a light bulb?"

Answer "Whadaya mean, "change"?" Bob Zemsky, Chronicle of Higher Education's Chronicle Review, December 2007

"The "Bright Star" of B-School Research: Finance  While other academic fields lie almost fallow — drawing criticism for lack of relevance — examples abound of finance research that makes a difference," by Roy Harris CFO.com, March 27, 2008 --- http://cfo.com/article.cfm/10927537/c_10923636

Our Tuesday article, "Business School for Dummies?" looked at the drive at accrediting group ACCSB to move research in the direction of providing more useful lessons for the business world.

Even as business schools draw fire for producing too little research of real relevance to Corporate America, the area of finance may be the single most notable exception — an area in which theory after theory is used to solve daily business problems.

"Finance is the bright star," says professor Gabriel Hawawini, one member of the AACSB "Impact of Research" task force, which strongly suggested in its recent report pressing for academic studies to do more to fill the needs presented by American business. "If you ask what contributions have been made, you would put finance at the top of the list for models, principles, and theories that are in use today," adds the Hawawini, currently a visiting professor of finance at the University of Pennsylvania's Wharton School.

Continued in article

Question
What research methodology flaws are shared by studies in political science and accounting science?

"Methodological Confusion:  How indictments of The Israel Lobby (by John J. Mearsheimer, Stephen M. Walt, ISBN-13: 9780374177720) expose political science's flaws" by Daniel W. Drezner, Chronicle of Higher Education's Chronicle Review, February 22, 2008, Page B5 --- http://chronicle.com/weekly/v54/i24/24b00501.htm 

Does the public understand how political science works? Or are political scientists the ones who need re-educating? Those questions have been running through my mind in light of the drubbing that John J. Mearsheimer and Stephen M. Walt received in the American news media for their 2007 book,  The Israel Lobby and U.S. Foreign Policy (Farrar, Straus and Giroux, 2007). Pick your periodical — The Economist, Foreign Affairs, The Nation, National Review, The New Republic, The New York Times Book Review, The Washington Post Book World — and you'll find a reviewer trashing the book.

From a political-science perspective, what's interesting about those reviews is that they are largely grounded in methodological critiques — which rarely break into the public sphere. What's disturbing is that the methodologies used in The Israel Lobby and U.S. Foreign Policy are hardly unique to Mearsheimer and Walt. Are the indictments of their book overblown, or do they expose the methodological flaws of the discipline in general?

The most persistent public criticism of Mearsheimer and Walt has been their failure to empirically buttress their argument with interviews. Writing in the Times Book Review, Leslie H. Gelb, president emeritus of the Council on Foreign Relations, criticized their "writing on this sensitive topic without doing extensive interviews with the lobbyists and the lobbied." David Brooks, a columnist for The New York Times, recently seconded that notion: "If you try to write about politics without interviewing policy makers, you'll wind up spewing all sorts of nonsense."

That kind of critique has a long pedigree. For decades public officials and commentators have decried the failure of social scientists to engage more deeply with the objects of their studies. Secretary of State Dean Acheson once objected to being treated as a "dependent variable." The New Republic ran a cover story in 1999 with the subhead, "When Did Political Science Forget About Politics?"

To the general reader, such critiques must sound damning. International-relations scholars know full well, however, that innumerable peer-reviewed articles and university-press books utilize the same kind of empirical sources that appear in The Israel Lobby. Most case studies in international relations rely on news-conference transcripts, official documents, newspaper reportage, think-tank analyses, other scholarly works, etc. It is not that political scientists never interview policy makers — they do (and Mearsheimer and Walt aver that they have as well). However, with a few splendid exceptions, interviews are not the bread and butter of most international-relations scholarship. (This kind of fieldwork is much more common in comparative politics.)

Indeed, the claim that political scientists can't write about policy without talking to policy makers borders on the absurd. The first rule about policy makers is that they always have agendas — even in interviews with social scientists. That does not mean that those with power lie. It does mean that they may not be completely candid in outlining motives and constraints. One would expect that to be particularly true about such "a sensitive topic."

Further, most empirical work in political science is concerned with actions, not words. How much aid has the United States disbursed to Israel? How did members of Congress vote on the issue? Without talking to members of Congress, thousands of Congressional scholars study how the legislative branch acts, by analyzing verifiable actions or words — votes, speeches, committee hearings, and testimony. Statistical approaches allow political scientists to test hypotheses through regression analysis. By Brooks's criteria, any political analysis of, say, 19th-century policy decisions would be pointless, since all the relevant players are dead.

Other methodological critiques are more difficult to dismiss. Walter Russell Mead's dissection of The Israel Lobby in Foreign Affairs does not pull any punches. Mead, a senior fellow at the Council on Foreign Relations, wrote that Mearsheimer and Walt "claim the clarity and authority of rigorous logic, but their methods are loose and rhetorical. This singularly unhappy marriage — between the pretensions of serious political analysis and the standards of the casual op-ed — both undercuts the case they wish to make and gives much of the book a disagreeably disingenuous tone."

Mead enumerates several methodological sins, in particular the imprecise manner in which the "Israel Lobby" is defined in the book. For their part, the book's authors acknowledge that the term is "somewhat misleading," conceding that "the boundaries of the Israel Lobby cannot be identified precisely." It is certainly true that many of the central concepts in international-relations theory — like "power" or "regime" — have disputed definitions. But most political scientists deal with nebulous concepts by explicitly offering their own definition to guide their research. Even if others disagree, at least the definition is transparent. In The Israel Lobby, however, Mearsheimer and Walt essentially rely on a Potter Stewart definition of the lobby: They know it when they see it. That makes it exceedingly difficult for other political scientists to test or falsify their hypotheses.

Many of the reviews of the book highlight two flaws that, disturbingly, are more pervasive in academic political science. The first is the failure to compare the case in question to other cases. For example, Mearsheimer and Walt go to great lengths to outline the "extraordinary material aid and diplomatic support" the United States provides to Israel. What they do not do, however, is systematically compare Israel to similarly situated countries to determine if the U.S.-Israeli relationship really is unique. An alternative, strategic explanation would posit that Israel falls into a small set of countries: longstanding allies bordering one or multiple enduring rivals. The category of states that meet that criteria throughout the time period analyzed by Mearsheimer and Walt is relatively small: Pakistan, South Korea, Taiwan, and Turkey. Compared to that smaller set of countries, the U.S. relationship with Israel does not look anomalous. The United States has demonstrated a willingness to expend blood, treasure, or diplomatic capital to ensure the security of all of those countries — despite the wide variance in the strength of each's "lobby."

Continued in article

Daniel W. Drezner is an associate professor of international politics at the Fletcher School at Tufts University.

Jensen Comment
When I read the above review entitled "Metholological Confusiion" I kept thinking of the thousands of empirical and analytical studies by accounting faculty and students that have similar methodology confusions. How many mathematical/empirical database studies relating accounting events (e.g., a new standard) with capital market behavior also conduct formal interviews with investors, analysts, fund managers, etc. Do analytical researchers conduct formal interviews with real-world decision makers before building their mathematical models? The majority of behavioral accounting studies conducted by professors use students as surrogates for real-world decision makers. This methodology is notoriously flawed and could be helped if the researchers had also interviewed real-world players.

And Drezner overlooked another common flaw shared by both political science and accountics research. If the findings are as important as claimed by authors, why aren't other researchers frantically trying to replicate the results? The lack of replication in accounting science (accountics research) is scandalous --- http://www.trinity.edu/rjensen/Theory01.htm#Replication
Formal and well-crafted interviews with important players (investors, standard setters, CEOs, etc.) constitute possible ways of replicating empirical and analytical findings.

The closest things we have to in-depth contact with real world players in accounting research is research conducted by the standard setters themselves such as the FASB, the IASB, the GASB, etc. Sometimes these are interviews, although more often then not they are comment letters. But accountics researchers wave off such research as anecdotal and seldom even quote the public archives of such interviews and comments. Surveys are frequently published but these tend to be relegated to less prestigious academic research journals and practitioner journals.

Most importantly of all in accountics is that the leading accounting research journals for tenure, promotion, and performance evaluation in academe are devoted to accountics paper. Normative methods, case studies, and interviews are rarely used in studies published in such journals. The following is a quotation from “An Analysis of the Evolution of Research Contributions by The Accounting Review (TAR): 1926-2005,” by Jean L. Heck and Robert E. Jensen, Accounting Historians Journal, Volume 34, No. 2, December 2007, Page 121.

Leading accounting professors lamented TAR’s preference for rigor over relevancy [Zeff, 1978; Lee, 1997; and Williams, 1985 and 2003]. Sundem [1987] provides revealing information about the changed perceptions of authors, almost entirely from academe, who submitted manuscripts for review between June 1982 and May 1986. Among the 1,148 submissions, only 39 used archival (history) methods; 34 of those submissions were rejected. Another 34 submissions used survey methods; 33 of those were rejected. And 100 submissions used traditional normative (deductive) methods with 85 of those being rejected. Except for a small set of 28 manuscripts classified as using “other” methods (mainly descriptive empirical according to Sundem), the remaining larger subset of submitted manuscripts used methods that Sundem [1987, p. 199] classified these as follows:

292          General Empirical

172          Behavioral

135          Analytical modeling

119          Capital Market

  97          Economic modeling

  40          Statistical modeling

  29          Simulation

 

It is clear that by 1982, accounting researchers realized that having mathematical or statistical analysis in TAR submissions made accountics virtually a necessary, albeit not sufficient, condition for acceptance for publication. It became increasingly difficult for a single editor to have expertise in all of the above methods. In the late 1960s, editorial decisions on publication shifted from the TAR editor alone to the TAR editor in conjunction with specialized referees and eventually associate editors [Flesher, 1991, p. 167]. Fleming et al. [2000, p. 45] wrote the following:

The big change was in research methods. Modeling and empirical methods became prominent during 1966-1985, with analytical modeling and general empirical methods leading the way. Although used to a surprising extent, deductive-type methods declined in popularity, especially in the second half of the 1966-1985 period.
 

I think the emphasis highlighted in red above demonstrates that "Methodological Confusion" reigns supreme in accounting science as well as political science.

February 22, 2008 reply from James M. Peters [jpeters@NMHU.EDU]

A couple of years ago, P. Kothari, one of the Editors of JAE and a full professor at MIT, visited the U. of Maryland to present a paper. In my private discussion with him, I asked him to identify what he considered to the the settled findings associated with the last 30 years of capital markets research in accounting. I pointed out that somewhere over half of all accounting research since Ball and Brown fit into this category and I was curious as to what the effort had added to Ball and Brown. That is, what conclusions have been drawn that could be considered settled ground so that researchers could move on to other topics. His response, and I quote, was "I understand your point, Jim." He could not identify one issue that researchers had been able to "put to bed" after all that effort.

Jim Peters
New Mexico Highlands University

February 22, 2008 reply from J. S. Gangolly [gangolly@CSC.ALBANY.EDU]

Jim,

P. Kothari's response is to be expected. I have had similar responses from at least two ex-editors of TAR; how appropriate a TLA! But who wants to bell the cats (or call off the naked emperors' bluff)? Accounting academia knows which side of the bread is buttered.

That you needed to flaunt Kothari's resume to legitimise his vacuous response shows the pathetic state of accounting academia.

If accounting academia is not to be reduced to the laughing stock of accounting practice, we better start listening to the problems that practice faces. How else can we understand what we profess to "research"? We accounting academics have been circling our wagons too long as a ploy to keep our wages arbitrarily high.

In as much as we are a profession, any academic on such a committee reduces the whole exercise to a farce.

Jagdish

Bob Jensen's threads on research methods in accounting can be found at http://www.trinity.edu/rjensen/Theory01.htm 

As David Bartholomae observes, “We make a huge mistake if we don’t try to articulate more publicly what it is we value in intellectual work. We do this routinely for our students — so it should not be difficult to find the language we need to speak to parents and legislators.” If we do not try to find that public language but argue instead that we are not accountable to those parents and legislators, we will only confirm what our cynical detractors say about us, that our real aim is to keep the secrets of our intellectual club to ourselves. By asking us to spell out those secrets and measuring our success in opening them to all, outcomes assessment helps make democratic education a reality.
Gerald Graff, "Assessment Changes Everything," Inside Higher Ed, February 21, 2008 --- http://www.insidehighered.com/views/2008/02/21/graff
Gerald Graff is professor of English at the University of Illinois at Chicago and president of the Modern Language Association. This essay is adapted from a paper he delivered in December at the MLA annual meeting, a version of which appears on the MLA’s Web site and is reproduced here with the association’s permission. Among Graff’s books are Professing Literature, Beyond the Culture Wars and Clueless in Academe: How School Obscures the Life of the Mind.

The consensus report, which was approved by the group’s international board of directors, asserts that it is vital when accrediting institutions to assess the “impact” of faculty members’ research on actual practices in the business world.

"Measuring ‘Impact’ of B-School Research," by Andy Guess, Inside Higher Ed, February 21, 2008 ---  http://www.insidehighered.com/news/2008/02/22/impact

Ask anyone with an M.B.A.: Business school provides an ideal environment to network, learn management principles and gain access to jobs. Professors there use a mix of scholarly expertise and business experience to teach theory and practice, while students prepare for the life of industry: A simple formula that serves the school, the students and the corporations that recruit them.

Yet like any other academic enterprise, business schools expect their faculty to produce peer-reviewed research. The relevance, purpose and merit of that research has been debated almost since the institutions started appearing, and now a new report promises to add to the discussion — and possibly stir more debate. The Association to Advance Collegiate Schools of Business on Thursday released the final report of its Impact of Research Task Force, the result of feedback from almost 1,000 deans, directors and professors to a preliminary draft circulated in August.

The consensus report, which was approved by the group’s international board of directors, asserts that it is vital when accrediting institutions to assess the “impact” of faculty members’ research on actual practices in the business world. But it does not settle on concrete metrics for impact, leaving that discussion to a future implementation task force, and emphasizes that a “one size fits all” approach will not work in measuring the value of scholars’ work.

The report does offer suggestions for potential measures of impact. For a researcher studying how to improve manufacturing practices, impact could be measured by counting the number of firms adopting the new approach. For a professor who writes a book about finance for a popular audience, one measure could be the number of copies sold or the quality of reviews in newspapers and magazines.

“In the past, there was a tendency I think to look at the [traditional academic] model as kind of the desired situation for all business schools, and what we’re saying here in this report is that there is not a one-size-fits-all model in this business; you should have impact and expectations dependent on the mission of the business school and the university,” said Richard Cosier, the dean of the Krannert School of Management at Purdue University and vice chair and chair-elect of AACSB’s board. “It’s a pretty radical position, if you know this business we’re in.”

That position worried some respondents to the initial draft, who feared an undue emphasis on immediate, visible impact of research on business practices — essentially, clear utilitarian value — over basic research. The final report takes pains to alleviate those concerns, reassuring deans and scholars that it wasn’t minimizing the contributions of theoretical work or requiring that all professors at a particular school demonstrate “impact” for the institution to be accredited.

“Many readers, for instance, inferred that the Task Force believes that ALL intellectual contributions must be relevant to and impact practice to be valued. The position of the Task Force is that intellectual contributions in the form of basic theoretical research can and have been extremely valuable even if not intended to directly impact practice,” the report states.

“It also is important to clarify that the recommendations would not require every faculty member to demonstrate impact from research in order to be academically qualified for AACSB accreditation review. While Recommendation #1 suggests that AACSB examine a school’s portfolio of intellectual contributions based on impact measures, it does not specify minimum requirements for the maintenance of individual academic qualification. In fact, the Task Force reminds us that to demonstrate faculty currency, the current standards allow for a breadth of other scholarly activities, many of which may not result in intellectual contributions.”

Cosier, who was on the task force that produced the report, noted that business schools with different missions might require differing definitions of impact. For example, a traditional Ph.D.-granting institution would focus on peer-reviewed research in academic journals that explores theoretical questions and management concepts. An undergraduate institution more geared toward classroom teaching, on the other hand, might be better served by a definition of impact that evaluated research on pedagogical concerns and learning methods, he suggested.

A further concern, he added, is that there simply aren’t enough Ph.D.-trained junior faculty coming down the pipeline, let alone resources to support them, to justify a single research-oriented model across the board. “Theoretically, I’d say there’s probably not a limit” to the amount of academic business research that could be produced, “but practically there is a limit,” Cosier said.

But some critics have worried that the report could encourage a focus on the immediate impact of research at the expense of theoretical work that could potentially have an unexpected payoff in the future.

Historically, as the report notes, business scholarship was viewed as inferior to that in other fields, but it has gained esteem among colleagues over the past 50 or so years. In that context, the AACSB has pursued a concerted effort to define and promote the role of research in business schools. The report’s concrete recommendations also include an awards program for “high-impact” research and the promotion of links between faculty members and managers who put some of their research to use in practice.

The recommendations still have a ways to go before they become policy, however. An implementation task force is planned to look at how to turn the report into a set of workable policies, with some especially worried about how the “impact” measures would be codified. The idea, Cosier said, was to pilot some of the ideas in limited contexts before rolling them out on a wider basis.

Jensen Comment
It will almost be a joke to watch leading accountics researchers trying of show how their esoteric findings have impacted the practice world when the professors themselves cannot to point to any independent replications of their own work --- http://www.trinity.edu/rjensen/Theory01.htm#Replication
Is the practice world so naive as to rely upon findings of scientific research that has not been replicated?

Bob Jensen's threads on assessment are at http://www.trinity.edu/rjensen/Assess.htm

February 22, 2008 reply from Ed Scribner [escribne@NMSU.EDU]

Bob,

I’d surprised to see much reaction from “accountics” researchers as they are pretty secure, especially since the report takes pains not to antagonize them. Anyway, in the words of Corporal Klinger of the 4077th MASH Unit, “It takes a lot of manure to produce one perfect rose.”

Ed

February 25, 2008 reply from Paul Williams [Paul_Williams@NCSU.EDU]

On 24 Feb 2008 at 14:18, David Albrecht wrote:

>

> I am struck by a seeming incongruity.

>

> On one hand there is no respect for accounting research in B-schools. On the other

> hand, publishing accounting research in peer-reviewed pubs is a requirement for AQ

> status in B-schools.

>

> More and more I am attracted to Ernest Boyer's description of multiple forms of

> scholarships and multiple outlets of scholarship.

 

Re: this conversation.

Ian Shapiro, professor of Political Science at Yale, has recently published a book "The Flight from Reality in the Human Sciences"  (Princeton U. Press, 2005) that assures that the problem is not confined to accounting (though it is more ludicrous a place for a discipline that is actually a practice).  All of the social sciences have succumbed to rational decision theory and methodological purity to the point that academe now largely deals with understanding human behavior only within a mathematically tractible unreality made real in the academy essentially because of its mathematical tractibility.  Jagdish recent post is insightful (and inciteful to the winners of this game in our academy).  The problem the US academy has defined for itself is not solvable.  Optimal information systems?  Information useful for decision making (without any consideration of the intervening "motives" (potentially infinite in number) that convert assessments into actions)?   

 

As Bob has so frequently reminded us replication is the lifeblood of science, yet we never replicate.  But we couldn't replicate if we wanted to because replication is not the point.  Anyone with a passing familiarity with laboratory sciences knows that a fundamental ethic of those sciences is the laboratory journal.  The purpose of the journal is to provide the precise recipe of the experiments so that other scientists can replicate.  All research in accounting (that is published in the "top" journals, at least) is "laboratory research."  But do capital market or principal/agent researchers maintain a log that decribes in minute detail the innumerable decisions that they made along the way in assembling and manipulating their data (as chemists and biologists are bound to do by virtue of the  research ethics of their disciplines) ?  No way.  From any published article, it is nearly impossible to actually replicate one of their experiments because the article is never sufficient documentation.  But, of course, that isn't the point. Producing politically correct academic reputations is what our enterprise is about. Ideology trumps science every time.  We don't want to know the "truth."  Sadly, this suits the profession just fine.  (It's this dream world that permits such nonsensical statements like trading off relevance for reliability -- how can I know how relevant a datum is unless I know something about its reliability?  Isn't the whole idea of science to increase the relevance of data by increasing their reliability?)

Bob Jensen's threads on the sad state of academic accounting research are at http://www.trinity.edu/rjensen/Theory01.htm#DoctoralPrograms

Also see http://www.trinity.edu/rjensen/Theory01.htm#AcademicsVersusProfession

Reviving Journalism Schools and Business Schools
For as long as doomsayers have predicted the decline of civic-minded reportage as we know it, reformers have sought to draft a rewrite of the institutions that train many undergraduate and graduate students pursuing a career in journalism. Criticisms of journalism schools have ranged from questioning whether the institutions are necessary in the first place (since many journalists, and most senior ones, don’t have journalism degrees) to debating the merits of teaching practical skills versus theory and whether curriculums should emphasize broad knowledge or specialization in individual fields . . . The sessions were part of an effort to evaluate the function of journalism schools in an age of new media and the public’s declining faith in the fourth estate: the Carnegie-Knight Initiative on the Future of Journalism Education, which in 2005 enlisted top institutions in the country to bolster their curriculums with interdisciplinary studies and expose students to different areas of knowledge, including politics, economics, philosophy and the sciences. The initiative, funded by the Carnegie Corporation of New York and the John S. and James L. Knight Foundation, also works with journalism schools to incubate selected students working on national reporting projects.
Andy Guess, "Reviving the J-School," Inside Higher Ed, January 10, 2008 --- http://www.insidehighered.com/news/2008/01/10/jschools

There are an increasing number of scholarly videos on this topic at
BigThink:  YouTube for Scholars (where intellectuals may post their lectures on societal issues) --- http://www.bigthink.com/

Some of you may benefit by analyzing similarities and differences between the above tidbit on J-Schools versus the AACSB effort to examine needs for change in B-Schools.

Key AACSB sites include the following:

http://www.aacsb.edu/Resource_Centers/AME/AME report.pdf

http://www.aacsb.edu/publications/metf/metfreportfinal-august02.pdf

http://www.aacsb.edu/publications/dfc/default.asp

http://www.aacsb.edu/wxyz/hp-sdc.asp

http://www.aacsb.edu/publications/ValueReport_lores.pdf

From The Wall Street Journal Accounting Weekly Review on January 11, 2008

Talking B-School: Teaching the Gospel of Management by Ron Alsop The Wall Street Journal Jan 08, 2008 Page: B4 Click here to view the full article on WSJ.com http://online.wsj.com/article/SB119974268053072925.html?mod=djem_jiewr_ac   TOPICS: Accounting, Internal Controls SUMMARY: Professor Charles Zech, director of the Center for the study of Church Management and a professor of economics at Villanova University, discusses their new MBA program. The article mentions internal controls needed in church management practices. CLASSROOM APPLICATION: Familiarity with specific types of MBA programs, general educational issues, and the issues of internal control evident in recent church and clergy scandals can be discussed in an introductory accounting, accounting information systems, or auditing class. QUESTIONS:  1.) You may have seen advertisements for MBA programs targeted to golf course or ski resort management. In general, why are different industries targeted in management education? 2.) Why did Villanova University decide to offer an MBA in church management? In what ways will Villanova target the MBA program? 3.) Not all universities may be able to offer this targeted MBA. Why not? 4.) What is transparency in financial reporting? How do examples given in the article indicate insufficient transparency in church management and reporting practices? 5.) What internal control weaknesses are identified in the article? List each weakness and describe a solution for the weakness. 6.) How do properly functioning internal controls support sufficient transparency in financial reporting? 7.) What is the concept of stewardship? How is it discussed in the objectives of financial reporting in both U.S. and international conceptual frameworks of accounting? 8.) How do the comments in the article make it clear that focusing on stewardship better fits church management than does focusing on other objectives and qualitative characteristics identified in the conceptual framework of accounting?   Reviewed By: Judy Beckman, University of Rhode Island

"Teaching the Gospel of Management Program Aims to Bring Transparency To Church Business Practices," by Ron Alsop, January 8, 2008; Page B4--- http://online.wsj.com/article/SB119974268053072925.html?mod=djem_jiewr_ac

The reputations of many Roman Catholic parishes have been tarnished in recent years, both by the priest sex-abuse scandals and a growing number of embezzlement cases. That has prompted a burgeoning movement to improve the management and leadership skills of church officials through new programs being offered primarily at Catholic universities. M.B.A. Track columnist Ron Alsop talked recently with Charles Zech, director of the Center for the Study of Church Management and a professor of economics at Villanova University's School of Business in Villanova, Pa., about the launch of its master's degree in church management in May and the need for more sophisticated and more transparent business practices in parishes and religious organizations.

WSJ: Why did Villanova decide to create a master's degree in church management?

Dr. Zech: We find that business managers at both the parish and diocesan level often have social work, theology or education backgrounds and lack management skills. While pastors aren't expected to know all the nitty-gritty of running a small business, they at least need enough training in administration to supervise their business managers. Before starting the degree, we ran some seminars in 2006 and 2007 as a trial balloon to see if folks were interested enough to pay for management education. The seminars proved to be quite popular, drawing people from all over the country, including high-level officials from both Catholic dioceses and religious orders.

How have the sexual-abuse scandals and embezzlement cases put a spotlight on poor management and governance practices?

The Catholic Church has some real managerial problems that were brought to light by the clergy abuse scandals. It became quite obvious that the church isn't very transparent and accountable in its finances. Settlements had been made off the books with abuse victims and priests had been sent off quietly for counseling, to the surprise of many parishioners. Then came a string of embezzlement cases. Our center on church management surveyed chief financial officers of U.S. Catholic dioceses in 2005 and found that 85% had experienced embezzlements in the previous five years. One of our recommendations was that parishes be audited once a year by an independent auditor. There clearly are serious questions about internal financial controls at the parish level, and we are now doing research on parish advisory councils and asking questions about such things as who handles the Sunday collection and who has check-writing authority. Does the same person count the collection, deposit the money and then reconcile the checkbook? Obviously, you're just asking for problems if it's the same person; you can imagine the temptations.

Beyond the need for better financial controls, what other management issues should get more attention from church leaders?

Performance management is definitely an important but neglected area. That's partly because it's a very touchy issue. Who is going to appraise the performance of a priest or a church worker who is also a member of the parish? There's great reluctance on the part of the clergy to be appraiser or appraisee. You have to view the parish as a family business and understand that it's like evaluating members of your family.

How will Villanova's church management degree be different from what other universities have started offering?

Some schools combine standard business classes with courses from theology and other departments. But if you're taking a regular M.B.A. finance class, you're learning about Wall Street and other things that aren't really relevant. What we're doing is creating courses specifically for this degree program, so there are both business and faith-based elements in every class. For example, the law course will deal with civil law relative to church law so students understand the possible conflicts. The accounting course will cover internal financial-control issues for churches. And the human-resource management class will include discussion of volunteers, a big part of the labor force for parishes.

Have you encountered any resistance from church officials?

Yes, some people say a church is not a business. But I point out that we still have to be good stewards of our resources -- our financial and human capital -- to carry out God's work on Earth. When you use management terms with bishops, they often get turned off. But when you use the word stewardship, it has more impact because it's in the Bible. Jesus talked about the importance of our being good stewards who take care of our talents and other gifts.

Is the degree restricted to Catholic clergy and lay managers?

The courses will have a Catholic focus because as a Catholic university, our mission is to try to meet the needs of our community. But the degree is certainly not restricted to Catholics. Every church has similar managerial problems. In fact, we're eager for other Christian denominations to become part of the program and provide some valuable contributions to class discussions. A typical course, however, would not apply to other religions because of the different way Christian churches are organized compared with synagogues and other religious institutions.

Why is the degree being offered primarily online, with only a one-week residency on campus?

Since we view the market for church-management education as national and even global, a distance-learning degree will attract clergy and church workers from any part of the world who can't take off for two years to come to Villanova. In fact, we already have heard from a priest in Ireland and a Presbyterian minister in Cameroon interested in enrolling in the program.

The church management degree costs $23,400. How can clergy and church workers afford it?

We expect the vast majority of students to be supported by a diocese or other religious or social service organizations. We will chop 25% off the price for anyone who can get their organization to pay a third of the tuition. That cuts a student's out-of-pocket costs by about half. We're trying to send the message to religious leaders that this is important and that they should invest in management training.

Bob Jensen's threads on controversies in higher education are at http://www.trinity.edu/rjensen/HigherEdControversies.htm

"The Theory Fetish: Too Much of a Good Thing? Management journals demand contributions to theory. But slavish devotion to theory inhibits other valuable research," by Donald C. Hambrick, Business Week, January 13, 2008 --- Click Here 

Recently I was at a brown-bag seminar where a pair of faculty colleagues in our business school's department of management sought advice about a preliminary research idea. We all quickly agreed that their research question was fascinating and would be of great interest to both academics and practicing managers. The only problem: The presenters had no theory.

No theory! Everyone knows that the top scholarly journals in management require without exception that manuscripts make contributions to theory. And so we spent the entire session that day going through our collective mental catalogues of theories. Theories that I'd never heard of were proposed. Things got a little frenzied: "Good God, there must be a theory that we can latch onto," someone said.

Losing the Trees for the Forest

Because these researchers are savvy about academic publishing, their project likely will appear some day in a leading journal. But the straightforward beauty of the original research idea will probably be largely lost. In its place will be what we too often see in our journals and what undoubtedly puts non-scholars off: a contorted, misshapen, inelegant product, in which an inherently interesting phenomenon has been subjugated to an ill-fitting theoretical framework.

Many nice things can be said about theory. Theories help us organize our thoughts, generate coherent explanations, and improve our predictions. But they are not ends in themselves, and in academic management we have allowed obsession with theory to compromise the larger goal of understanding. Most important, perhaps, it prevents the reporting of rich detail about interesting phenomena for which no theory yet exists but which, once reported, might stimulate the search for an explanation.

Happily, our sister disciplines in business education—accounting, finance, and marketing—are not afflicted to the extent that those of us in management are. But the breadth and variety of the subjects that fall under the category of management exceed those of the other business school academic departments; a number of MBA-granting institutions, in fact, call themselves schools of management. If management scholars fail to connect with real-life managers or management scholarship is shrugged off by managers as irrelevant—both of which happen with regularity—the credibility of all business academe suffers.

Management's idolization of theory began after two blue-ribbon reports of the late 1950s, from the Carnegie and Ford foundations, levied withering attacks on business schools for their lack of academic sophistication. As a result, in the 1960s and 1970s schools adopted a new commitment to drawing from basic academic disciplines (e.g., economics and psychology), and to analytic rigor, science, and—above all—theory. Since then, however, other fields have relaxed their single-mindedness about theory, while management scholars have not.

Trapped in Inertia?

To confirm this, I recently analyzed the 120 articles published in 2005 by three leading scholarly management journals—the Academy of Management Journal, the Administrative Science Quarterly, and Organization Science. Every one contained some variation of the word "theory." In contrast, only 78% of the 178 articles published in 2005 in the Journal of Marketing, the Journal of Finance, and Accounting Review contained those words. Moreover, they appeared 18 times, on average, in each management article, but only eight times, on average, in each non-management article. Finally, about two-thirds of the articles in the management journals had section headings that trumpeted "theory," compared with one in five headings in the non-management journals.

I must admit to uncertainty about the reason for this continuing fetish; perhaps we in management academe are simply trapped in our own inertia. But at what a cost! To illustrate, let me take a hypothetical case from another field that has nothing to do with management or business.

Continued in article

Great Minds in Management:  The Process of Theory Development --- http://www.trinity.edu/rjensen//theory/00overview/GreatMinds.htm

"Cornell Theory Center Aids Social Science Researchers," PR Web, June 19, 2006 --- http://www.prweb.com/releases/2006/6/prweb400160.htm

Bob Jensen’s threads on the schism between academic research and the business world --- http://www.trinity.edu/rjensen/Theory01.htm#AcademicsVersusProfession

Question
Given the dire shortages of doctoral students in accountancy, should the requirement for doctoral degrees be eliminated in higher education?

Perhaps I'm old and tired, but I always think that the chances of finding out what really is going on are so absurdly remote that the only thing to do is to say hang the sense of it and just keep yourself occupied.
Douglas Adams

There are two explanations one can give for this state of affairs here. The first is due to the great English economist Maurice Dobb according to whom the theory of value was replaced in the United States by theory of price. May be, the consequence for us today is that we know the price of everything but perhaps the value of nothing. Economics divorced from politics and philosophy is vacuous. In accounting, we have inherited the vacuousness by ignoring those two enduring areas of inquiry.
Professor Jagdish Gangolly, SUNY Albany

The second is the comment that Joan Robinson made about American Keynsians: that their theories were so flimsy that they had to put math into them. In accounting academia, the shortest path to respectability seems to be to use math (and statistics), whether meaningful or not.
Professor Jagdish Gangolly, SUNY Albany

There are two sides to nearly every profession (as opposed to a narrow trade). The first one is the clinical side, and the second one is the research side. But this is not to say that the twain do not meet.

I advocate requiring that most (maybe not all) clinical instructors be grounded solidly in research. Requiring a PhD is a traditional way to get groundings in research. Probably more importantly is that doctoral studies are ways to motivate clinically-minded students to attempt to do research on clinical issues and make important contributions to the practicing profession.

I define “research” as a contribution to new knowledge. Among other things a good doctoral program should make scholars more appreciative of good research and critical of bad/superficial research that does not contribute to much of anything that is relevant, including research that should get Senator William Proxmire's  Golden Fleece Awards. Like urban cowboys, our academic accounting researchers are all hat (mathematical/statistical models) with no cows.

The problem with accountancy doctoral programs is that they’ve become narrowly bounded by accountics (especially econometrics and psychometrics) that in the past three decades have made little progress toward helping the clinical side of our profession of accountancy. This makes our doctoral programs very much unlike those in economics, finance, medicine, science, and engineering where many clinical advances in their disciplines have emerged from studies in doctoral programs.

The problem with higher education in accountancy is not that we require doctoral degrees in our major colleges and universities. The problem is that our doctoral programs shut out research methodologies that are perhaps better suited for making research discoveries that really help the clinical side of our profession. Accountics models just do not deal well with missing variables and nonstationarities that must be allowed for on the clinical side of accountancy. Humanities researchers face many of these same issues and have evolved a much broader arsenal of research methodologies that are verboten in accounting doctoral programs --- (See below).

The related problem is that our leading scholars running those doctoral programs have taken a supercilious view of the clinical side of our profession. Or maybe it’s just that these leaders do not want to take the time and trouble to learn the clinical side of the profession. Once again I repeat the oft-quoted referee of an Accounting Horizons rejection of Denny Beresford’s 2005 submission

I quote from http://www.trinity.edu/rjensen/Theory01.htm#AcademicsVersusProfession

*************
1. The paper provides specific recommendations for things that accounting academics should be doing to make the accounting profession better. However (unless the author believes that academics' time is a free good) this would presumably take academics' time away from what they are currently doing. While following the author's advice might make the accounting profession better, what is being made worse? In other words, suppose I stop reading current academic research and start reading news about current developments in accounting standards. Who is made better off and who is made worse off by this reallocation of my time? Presumably my students are marginally better off, because I can tell them some new stuff in class about current accounting standards, and this might possibly have some limited benefit on their careers. But haven't I made my colleagues in my department worse off if they depend on me for research advice, and haven't I made my university worse off if its academic reputation suffers because I'm no longer considered a leading scholar? Why does making the accounting profession better take precedence over everything else an academic does with their time?
**************

Joel Demski steers us away from the clinical side of the accountancy profession by saying we should avoid that pesky “vocational virus.” (See below).

The (Random House) dictionary defines "academic" as "pertaining to areas of study that are not primarily vocational or applied , as the humanities or pure mathematics." Clearly, the short answer to the question is no, accounting is not an academic discipline.
Joel Demski, "Is Accounting an Academic Discipline?" Accounting Horizons, June 2007, pp. 153-157

Statistically there are a few youngsters who came to academia for the joy of learning, who are yet relatively untainted by the vocational virus. I urge you to nurture your taste for learning, to follow your joy. That is the path of scholarship, and it is the only one with any possibility of turning us back toward the academy.
Joel Demski, "Is Accounting an Academic Discipline? American Accounting Association Plenary Session" August 9, 2006 --- http://www.trinity.edu/rjensen//theory/00overview/theory01.htm

Too many accountancy doctoral programs have immunized themselves against the “vocational virus.” The problem lies not in requiring doctoral degrees in our leading colleges and universities. The problem is that we’ve been neglecting the clinical needs of our profession. Perhaps the real underlying reason is that our clinical problems are so immense that academic accountants quake in fear of having to make contributions to the clinical side of accountancy as opposed to the clinical side of finance, economics, and psychology.

Our problems with doctoral programs in accountancy are shared with other disciplines, notably education and nursing schools.
Bob Jensen's threads on controversies in higher education are at http://www.trinity.edu/rjensen/HigherEdControversies.htm

Question
Is accounting an "academic" discipline?

The (Random House) dictionary defines "academic" as "pertaining to areas of study that are not primarily vocational or applied , as the humanities or pure mathematics." Clearly, the short answer to the question is no, accounting is not an academic discipline.
Joel Demski, "Is Accounting an Academic Discipline?" Accounting Horizons, June 2007, pp. 153-157

Statistically there are a few youngsters who came to academia for the joy of learning, who are yet relatively untainted by the vocational virus. I urge you to nurture your taste for learning, to follow your joy. That is the path of scholarship, and it is the only one with any possibility of turning us back toward the academy.
Joel Demski, "Is Accounting an Academic Discipline? American Accounting Association Plenary Session" August 9, 2006 --- http://www.trinity.edu/rjensen//theory/00overview/theory01.htm

Jensen Comment
Joel's lament is a bit confusing since for the past four decades, virtually all doctoral programs have replaced accounting professional content with mathematics, statistics, econometrics, psychometrics, and sociometrics content to a fault and to a point where very few accountants are interested in applying for accountancy doctoral programs --- http://www.trinity.edu/rjensen//theory/00overview/theory01.htm#DoctoralPrograms

The decline in doctoral program graduates (to less than 100 per year in the United States) combined with the scientific requirements for publication in leading academic accounting research journals resulted in the academy serving the accountancy profession less and less over the past few decades:

http://www.trinity.edu/rjensen//theory/00overview/theory01.htm#DoctoralPrograms

http://www.trinity.edu/rjensen/395wpTAR/03MainDocumentMar2007.htm

It would help if Joel would be more explicit about what types of basic "academic" research studies qualify as "accounting research" and why there is virtually none of it being produced according to his paper and his address to the AAA membership in August 2006. In particular, I would like to know what types of academic "accounting" publications set academic accounting apart from mathematical economics and mathematics disciplines such that these basic research contributions can still be called "accounting" research that is not applied (in the sense of his definition of "academic" research as not being applied).

Following Joel's paper is a paper by the same title "is Accounting an Academic Discipline?" by John C. Fellingham, Accounting Horizons, June 2007, pp. 159-163. John features the following quotation from Henry Rand Hatfield in 1924:

I am sure that all of us who teach accounting in the university suffer from the implied contempt of our colleagues, who look upon accounting as an intruder, a Saul among the prophets, a paria whose very presence detracts somewhat from the sanctity of the academic halls.
Henry Rand Hatfield, "An Historical Defense of Bookkeeping," Journal of Accountancy, 1924.

I consider this quotation to be inappropriate in 2007. Professor Hatfield was referring to the teaching of bookkeeping which is no longer the mundane vocational subject matter of college accounting in the past fifty or more years. I consider most of what we now teach in college accountancy to be very appropriate in service to the accountancy profession. You can read more about accounting education in Hatfield's time in the following historic papers:

Allen, C. E. (1927), "The growth of accounting instruction since 1900," The Accounting Review (June): 150-166 ---
http://maaw.info/TheAccountingReview.htm Click on the "Non USF User Link"

Atkins, P. M. (1928), "University instruction in industrial cost accounting," The Accounting Review,"  (December): 345-363 --- http://maaw.info/TheAccountingReview.htm  Click on the "Non USF User Link"

Atkins, P. M. (1929), "University instruction in industrial cost accounting,"  The Accounting Review (March): 23-32 ---
http://maaw.info/TheAccountingReview.htm  Click on the "Non USF User Link"

I guess what I'm really trying to say is that accountancy is a profession like law is a profession, medicine is a profession, architecture is a profession, engineering is a profession, pharmacy is a profession, etc. Why does the academy need to apologize for teaching to the profession of accountancy when in fact the academy is very proud to serve those other highly esteemed professions. I do not see schools of law and schools of medicine apologizing to the world for nobly serving those professions.

Both Demski and Fellingham made emotional appeals for academic accounting researchers to make noteworthy contributions to the "true academic disciplines" as quoted by Fellingham on Page 163. Not only should this be a goal, but in a sense they are arguing that this should be a primary goal far above the goal of serving the accountancy profession. I fail to note similar appeals being made by professors of law and medicine and engineering. These professions do distinguish between clinical versus research publications and teaching, but in general they do not further glorify their research if it cannot conceivably have some relevance to their professions. Indeed, even the most basic chemical and physiological research in medicine still takes place with an eye toward eventual relevance to human health.

I might also note that both law and medicine also publish some academic research that is not based upon esoteric mathematics and statistics. For example, historical and philosophical research methodologies are still allowed in their most prestigious academic law and science journals, which currently is not the case for leading academic accounting research journals.

By way of example, since Joel Demski took charge of the accounting doctoral program at the University of Florida, every applicant to that doctoral program cannot even matriculate into the program before pre-requisites of advanced mathematics are satisfied.

Students are required to demonstrate math competency prior to matriculating the doctoral program. Each student's background will be evaluated individually, and guidance provided on ways a student can ready themselves prior to beginning the doctoral course work. There are opportunities to complete preparatory course work at the University of Florida prior to matriculating our doctoral program. 
University of Florida Accounting Concentration  --- http://www.cba.ufl.edu/fsoa/docs/phd_AccConcentration.pdf

Why does every candidate have to qualify in advanced mathematics rather than allowing substitutes such as advanced philosophy or advanced legal studies?

I might also add that science and medicine academic journals also still place monumental priorities on replications of research findings. Leading academic accounting research journals will not even publish replications and mostly as a result it is very difficult to find replications of most of the top academic accounting research papers published by so-called leading accounting researchers --- http://www.trinity.edu/rjensen//theory/00overview/theory01.htm#Replication

More of my rants on this can be found in the following links:

http://www.trinity.edu/rjensen//theory/00overview/theory01.htm#AcademicsVersusProfession

http://www.trinity.edu/rjensen//theory/00overview/theory01.htm#DoctoralPrograms

http://www.trinity.edu/rjensen/395wpTAR/03MainDocumentMar2007.htm

Question
Are college students good surrogates for real life studies?
The majority of behavioral experiments in accounting have used students as experimental subjects.

"Too Many Studies Use College Students As Their Guinea Pigs," by Carl Bialik, The Wall Street Journal, August 10, 2007; Page B1--- http://online.wsj.com/article/SB118670089203393577.html?mod=todays_us_marketplace

Many of the numbers that make news about how we feel, think and behave are derived from studying a narrow population: college students. It's cheap for social scientists to tap into the on-campus research pool -- everyone from psychology majors who must participate in studies for course credit to students who respond to posters promising a few bucks if they sign up.

Consider just three studies that have received press in the past month. In one, muscular men were twice as likely as their less well-built brethren to have had more than three sex partners -- at least according to 99 UCLA undergraduates. Another, an examination of six separate studies that tape-recorded college students' conversations, found that women, despite being stereotyped as relatively chatty, spoke just 3% more words each day than men. And in the third, 40 undergraduates at Washington University in St. Louis were 6% more likely to complete verbal jokes and 14% more likely to complete visual jests than 41 older study participants.

College students are "essentially free," says Brian Nosek, a psychology professor at the University of Virginia. "We walk out of our office, and there they are." The epitome of a convenience sample, they have become the basis for what some critics call the "science of the sophomore."

But psychologists may be getting what they pay for. College students aren't representative by age, wealth, income, educational level or geographic location. "What if you studied 7-year-old kids and made inferences about geriatrics?" asks Robert Peterson, a marketing professor at the University of Texas, Austin. "Everyone would say you can't do that. But you can use these college students."

Prof. Peterson scoured the literature for examples of studies that examined the same psychological relationships in students and nonstudents. In almost half of the 63 relationships he examined, there were major discrepancies between students and nonstudents: The two groups either produced contradictory results, or one showed an effect at least twice as great as the other.

In a follow-up study, not yet published, Prof. Peterson demonstrated that even college students are far from homogeneous. With help from faculty at 58 schools in 31 states, he surveyed undergraduate business students across the country and found that they vary widely from school to school. That means a professor studying the relationship between students' attitudes toward capitalism and business ethics at one school could reach a sharply different conclusion than a professor at another school.

"People have always been aware of this issue," Prof. Peterson says, but many have chosen to ignore it. A 1986 paper by David Sears, a UCLA psychology professor, documented the increased use of college students for research in the prior quarter century and explored the potential biases that might introduce. In the meantime, the use of college students has, if anything, risen, researchers say.

Authors of the recent studies on sex, chattiness and humor acknowledge the limitations of their research pool. But they argue that college students do just fine for purposes of studying basic cognitive processes. Others agree. "If you think all people have the same attitudes as introductory psychology students, that's really problematic," says Tony Bogaert, a psychology professor at Brock University in St. Catharines, Ontario. "But if you're looking at cognitive processes, intro psych students probably work OK."

After all, every study is hampered by possible differences between those who volunteer to participate and those who don't, whether they're college students or a broader group.

In any case, the fault often lies not with the researchers, who are careful not to overstate the impact of their findings, but with the news articles suggesting the numbers apply to all humanity. "Even if you only focus on college students, the results are still generalizable to millions of Americans," says David Frederick, a UCLA psychology graduate student and lead author of the study on muscularity and sex partners.

Prof. Nosek, a critic of the science of the sophomore, responds that college students are still developing their personalities and behavior. "There is no other time outside my life as an undergraduate where I thought it would be a good idea to wear all my clothes inside out," he says, or to "stay up for as many hours in a row as I could just to see what happens."

To widen the pool of people answering questions about, say, all-nighters, Prof. Nosek has submitted a proposal to the National Institutes of Health to fund the creation of an international, online research panel. That would build on studies his laboratory has already administered online at ProjectImplicit.net.

Online research has its own problems, but at least it taps into the hundreds of millions of people who are online globally, rather than just the hundreds of people enrolled in Psych 101.

"The scientific reward structure does not benefit someone who puts in the enormous effort" to create a representative research sample, Prof. Nosek says. "The way to change researchers' data habits is to make it easier to collect data in a more generalizable way."

Question
When should professors add practitioners to their courses?

"Mixing Theory and Practice on Defense Policy," by Andy Guess, Inside Higher Ed, August 8, 2007 --- http://www.insidehighered.com/news/2007/08/08/defense

In a class about United Nations regulations on the laws of war, the discussion turned inevitably to Star Trek.

When the U.N. authorizes sanctions against a particular nation, said Ilan Berman, the professor, the institution acts much like the Borg — in the show’s universe, a mechanized force of cyborg mercenaries bent on assimilating all of mankind. The analogy was lost on most of the class, but Berman drove the point home for those who didn’t regularly tune in to syndicated science fiction programs in the early 1990s: Each member nation must act as part of the collective.

The lecture, peppered as it was with the occasional pop culture reference, covered a lot of ground, from the U.S. national security strategy to the justifications for nations’ use of force. The students in the class — five were present on a Monday night in July for the elective — come from a range of backgrounds, several of them working full-time, but all in the program with an eye toward defense policy, whether in the government, consulting or think tanks.

In Washington, those are hardly unorthodox goals. Programs in defense or security studies churn out students every year in the nation’s capital, from well-known and respected institutions such as Johns Hopkins University’s School of Advanced International Studies and Georgetown University’s School of Foreign Service, and also outside the Beltway at places like Harvard (Kennedy) and Princeton (Wilson). The students in Berman’s class, tucked in a conference room on the seventh floor of a corporate office building in Fairfax, Va., are part of a relatively new experiment: What if a state school in Springfield, Mo., operated a satellite campus alongside the established players in defense studies?

So far, enrollments have been growing each year since the unit opened shop in 2005 within commuting distance from the city, sandwiched between a rapidly developing apartment complex and an office park. The Department of Defense and Strategic Studies, a part of Missouri State University, caters to students who want to break into Beltway defense circles with a public university price tag and the advantages of a more practical approach. In doing so, it offers a two-year M.S. degree that requires both coursework and internships.

Having access to actual practitioners in the classroom means, in this case, connections to defense and foreign policy officials in the government. As with others like it, the program has had a long revolving-doors tradition, starting from its original incarnation in the early 1970s at the University of Southern California, where it was founded by a former defense official who served on the SALT I delegation, William R. Van Cleave, and partially funded by the free-market Earhart Foundation. But unlike at similar departments elsewhere, Missouri State’s full-time faculty of three and its nine affiliated lecturers tend to come mainly from positions in Republican administrations and conservative-leaning institutions.

Continued in article

Jensen Comment
Some years back Professor Sharon Lightner (UC at San Diego) put together a really interesting online course for students, practitioners, and accounting standard setters in six different countries where the classes met synchronously.
"An Innovative Online International Accounting Course on Six Campuses Around the World" --- http://www.trinity.edu/rjensen/255light.htm

Question
Does faculty research improve student learning in the classrooms where researchers teach?
Put another way, is research more important than scholarship that does not contribute to new knowledge?

Major Issue
If the answer leans toward scholarship over research, it could monumentally change criteria for tenure in many colleges and universities.

AACSB International: the Association to Advance Collegiate Schools of Business, has released for comment a report calling for the accreditation process for business schools to evaluate whether faculty research improves the learning process. The report expresses the concern that accreditors have noted the volume of research, but not whether it is making business schools better from an educational standpoint.
Inside Higher Ed, August 6, 2007 --- http://www.insidehighered.com/news/2007/08/06/qt

"Controversial Report on Business School Research Released for Comments," AACSB News Release, August 3, 2007 --- http://www.aacsb.edu/Resource_Centers/Research/media_release-8-3-07.pdf

FL (August 3, 2007) ― A report released today evaluates the nature and purposes of business school research and recommends steps to increase its value to students, practicing managers and society. The report, issued by the Impact of Research task force of AACSB International, is released as a draft to solicit comments and feedback from business schools, their faculties and others. The report includes recommendations that could profoundly change the way business schools organize, measure, and communicate about research.

AACSB International, the Association to Advance Collegiate Schools of Business, estimates that each year accredited business schools spend more than $320 million to support faculty research and another half a billion dollars supports research-based doctoral education.

“Research is now reflected in nearly everything business schools do, so we must find better ways to demonstrate the impact of our contributions to advancing management theory, practice and education” says task force chair Joseph A. Alutto, of The Ohio State University. “But quality business schools are not and should not be the same; that’s why the report also proposes accreditation changes to strengthen the alignment of research expectations to individual school missions.”

The task force argues that a business school cannot separate itself from management practice and still serve its function, but it cannot be so focused on practice that it fails to develop rigorous, independent insights that increase our understanding of organizations and management. Accordingly, the task force recommends building stronger interactions between academic researchers and practicing managers on questions of relevance and developing new channels that make quality academic research more accessible to practice.

According to AACSB President and CEO John J. Fernandes, recommendations in this report have the potential to foster a new generation of academic research. “In the end,” he says, “it is a commitment to scholarship that enables business schools to best serve the future needs of business and society through quality management education.”

The Impact of Research task force report draft for comments is available for download on the AACSB website: www.aacsb.edu/research. The website also provides additional resources related to the issue and the opportunity to submit comments on the draft report. The AACSB Committee on Issues in Management Education and Board of Directors will use the feedback to determine the next steps for implementation.

The AACSB International Impact of Research Task Force
Chairs:
Joseph A. Alutto, interim president, and
John W. Berry, Senior Chair in Business, Max M. FisherCollege of Business, The Ohio State University

K. C. Chan, The Hong Kong University of Science and Technology
Richard A. Cosier, Purdue University
Thomas G. Cummings, University of Southern California
Ken Fenoglio, AT&T
Gabriel Hawawini, INSEAD and the University of Pennsylvania
Cynthia H. Milligan, University of Nebraska-Lincoln
Myron Roomkin, Case Western Reserve University
Anthony J. Rucci, The Ohio State University

Teaching Excellence Secondary to Research for Promotion, Tenure, and Pay ---
http://www.trinity.edu/rjensen/HigherEdControversies.htm#TeachingVsResearch

Bob Jensen's threads on higher education controversies are at
http://www.trinity.edu/rjensen/HigherEdControversies.htm

My letter to Kate

Now that the 2007 Annual Meetings are ended and it is public information that finance professor Erik Lie (University of Iowa) won the AICPA/AAA Notable Contributions to Accounting Literature Award, I feel compelled to make my letter to Kate written on May 17 public. This year I served on the Part 2 selection committee that chose Erik Lie from the list of candidates submitted to us by the Part 1 Screening Committee. Professor Lie's contribution was truly notable and deserving of this award for 2007.

But I have serious reservations about the Part 1 Screening Committee's choices over the past two decades. I think it's been a rigged game in which the Part 2 Selection Committee has no choice but to choose an esoteric "accountics" article published in an academic research journal.

My letter to Kate is entirely consistent with the long tidbit below received from Paul Williams on August 10, 2007 after the AAA 2007 Annual Meetings in Chicago. Kate was chair of our 2007 Selection Committee but not the 2007 Screening Committee.

You can read my letter to Kate http://www.trinity.edu/rjensen/2007NotableLiteratureAward.htm

An important aspect of this debate is the timing of the fall off of practitioner interest in academic accounting research. Both public and managerial accountants at one time followed very closely the theory and practice research of academic accountants much like lawyers take an interest in law school research, physicians take an interest in medical research, engineers take an interest in engineering school research, etc. We had it made until the 1960s. Then accounting practitioner interest in our research virtually zeroed out in the ensuing decades. We no longer serve our profession, although we try and try to make a contribution to the economics and finance professions. Joel Demski in a plenary speech in Washington DC called serving the accounting profession a “vocational virus” to avoid so that doing research can be “more fun.” As Judy Rayburn pointed out when she was President Elect of the AAA, the citation records indicate that there is little interest by anybody, including finance and economics professor, in our leading accountics research.

I think the telltale turning point was when accountics professors took over the refereeing of articles in the leading accounting research journals in the 1960s and 1970s. Before then practitioners took a keen interest in both our top journals like The Accounting Review and our sessions/debates at AAA annual meetings. Between 1925 and 1965 practitioners published articles in TAR and had more members in the AAA than did colleges. In fact the longest running editor (Kohler) of TAR was a practitioner --- http://fisher.osu.edu/departments/accounting-and-mis/the-accounting-hall-of-fame/membership-in-hall/eric-louis-kohler/  

Now practitioner participation in the AAA is virtually zero except for PR partners and PR staff employees of large firms. How long has it been since a practitioner published/cited a paper in TAR or Accounting Horizons?

It’s very revealing to compare the titles and authors of papers published in TAR between 1925 and 1965 versus those published 1966-2008. Zeff and Granof claim that leading published research was just more interesting before the 1960s.

You can read more about the “Perfect Storm” of the 1960s that ended practitioner interest in leading academic accounting research at http://www.trinity.edu/rjensen/395wpTAR/Web/TAR395wp.htm

The FASB now sees little interest in even keeping an academic on the Board. I’m sure Katherine and Tom did their best, but we did not give them enough good material to bring to the Board.

An Analysis of the Contributions of The Accounting Review Across 80 Years: 1926-2005 --- http://www.trinity.edu/rjensen/395wpTAR/Web/TAR395wp.htm
Co-authored with Jean Heck and forthcoming in the December 2007 edition of the Accounting Historians Journal.

Bob Jensen's threads on the sad state of academic accounting research --- http://www.trinity.edu/rjensen/Theory01.htm#AcademicsVersusProfession

David Dennis organized a discussion panel to address the state of academic research in accounting. I could not be at the AAA meetings this year. But Paul Williams was on the panel and sent out the following message to panel members.

Paul Williams (North Carolina State University) Weighs in Once Again on the Sad State of Accounting Research in the Academy. Paul gave me permission to post his email message to the panel members.

August 10, 2007 message from Paul Williams [Paul_Williams@ncsu.edu]

It is a source of constant frustration that there exists reams of "empirical evidence" that the US academy is as we trouble makers say it is.  For folks who claim to worship empirical evidence there is a great reluctance to consider it.  Jacci Rodgers and I have another paper that you didn't include that was published in The Accounting Historians Journal that dealt with authors during the same period of time as our editors' paper. 

We did a comparison of elite school graduates appearances as authors in TAR (The Accounting Review) with their proportion in the population of North American PhDs (a procedure that was biased in that it overstates the proportion of elite graduates who were in the effective population of people of publishing age).  In Table 3 of that paper we report the proportion of appearance by elite grads and their proportion of the total North American PhD population at the beginnning of each TAR editor's term starting with

Trumball, the first editor to have a published editorial board, the first number is proportion of appearances and the second is proportion of PhDs:

Editor
Trumball:         63.6/63.5

Griffin:             71.3/59.6

Hendrickson:    75/53.7

Keller:              61.1/50.3

Decoster:         63/45.2

Zeff:                 51.9/43.1

Sundem:            47.1/38

Kinney:             50.6/34.7

Abdel-khalik:     56.6/33

 

Through Zeff and Sundems' editorships we start to see the effects of the emergence of the many new doctoral programs that were created during the 1970s.  The dilution of elite school dominance proceeded apace through time as the elite became a smaller proportion of the total population.  I had a paper accepted in TAR by both Zeff and Sundem: both experiences were good.  Both Zeff and Sundem were open-minded and quite helpful during the process; the reviews were constructive. 

But this expected demographically induced trend dramatically reversed itself after Sundem's editorship.  Since that time the elite appearances among authors has hovered, Avogadro's number-like around the mid-60 percent mark -- the proportion that prevailed when Trumball was editor.  All of a sudden the virtues of scholarship that Zeff and Sundem were able to recognize in the work of people not trained at elite schools as conventional economists disappeared.  The ideologues took over by default because of TAR's fear of losing so much reputational ground to JAR and JAE.  TAR became a JAR and JAE clone.  It hasn't changed since. 

So why doesn't Bill McCarthy get enough good systems papers? Perhaps it's because we haven't been terribly interested, for nearly 25 years, in training in U.S. PhD programs people who could do quality systems, or sociological, or historical, or legal, or anthropological work in accounting.  As Jagdish Gangolly noted on the AECM, finance types reproduce like mosquitoes, but it is a struggle for anyone interested in some "causal delta" other than neoclassical economics to find a place to study. 

Today, with the exception of a couple of places, you have to go outside the United States.  Why submit a paper to TAR when the editorial process is not one to be trusted?  Those of us who have been in the AAA a long time have heard these promises of "inclusiveness" before.  They were hot air then, they're hot air now unless the TAR editorial process is willing to take a laxative and publish some papers that may not be the best (there are an awful lot of "main-stream" papers published that aren't very good, either). 

TAR has to signal it isn't telling us another fib and that involves more than just passively sitting around waiting for papers to come.  Trust has been lost and you won't get it back by chastising the mistrustful.  Wouldn't it be refreshing to see someone from the editorial board show up at conferences like IPA, APIRA, CPA, . . . etc. to press the flesh and find out what the rest of the world thinks?

It is perhaps not a coincidence that the only two papers ever published in TAR informed by critical literature (papers by Chua and Hines) were ushered through the review process by Sundem.  Nothing of that kind has ever appeared in TAR since. 

Even JAR published a paper by Peter Miller!

David: kudos on your item 8.  As the U.S. has become the O.E.C.D. country with the most skewed distribution of income and wealth and as our great experiment in democracy appears more and more each day to be less and less robust (see Prem Sikka's work on the extensiveness of accounting corruption), we get a scholarly community primarily fixated on individual career enhancement through the engineering of a linear model with an R-squared of seldom double digits explaining yet some other absurdity about why Nozickian justice is the sine qua non of human  existence.  

I have seen literally  thousands of those models over the years and no two have ever born any resemblance to each other. 

What kind of "models" are really only unique representations of themselves?  Thank you for organizing the panel and allowing me to participate. 

Paul

 Paul Williams

paul_williams@ncsu.edu

(919)515-4436

The Financial Accounting Standards Board recently approached Bloomfield about studying how to create financial accounting standards that will assist investors as much as possible, he quickly turned to the virtual world for answers.

"Theory Meets Practice Online: Researchers and academics are looking to online worlds such as Second Life to shed new light on old economic questions," by Francesca Di Meglio, Business Week, July 24, 2007 --- Click Here 

In fact, many economics researchers, including Bloomfield, professor of accounting at Cornell's Johnson Graduate School of Management, are using the virtual environment to test ideas involving staples of economics such as game theory, the effects of regulation, and issues involving money. Since 1989, Bloomfield has been running experiments in the lab in which he creates small game economies to study narrow issues. But when the Financial Accounting Standards Board recently approached Bloomfield about studying how to create financial accounting standards that will assist investors as much as possible, he quickly turned to the virtual world for answers.

"It would be very difficult to look at the complex issues that FASB is trying to address with eight people in a laboratory playing a very simple economic game," he says. "I started looking for how I could create a more realistic economy with more players dealing with a high degree of complexity. It didn't take me long to realize that people in virtual worlds are already doing just that."

. . .

At Indiana University, researcher Edward Castronova has posed the idea of creating multiple virtual economies to study the effects of different regulatory policies. At Indiana, Castronova is director of the Synthethic Worlds Initiative, a research center to study virtual worlds. "The opportunity is to conduct controlled research experiments at the level of all society, something social scientists have never been able to do before," the center's Web site notes (see BusinessWeek.com, 5/1/06, "Virtual World, Virtual Economies").

A virtual stock market is certainly not the only online entity that opens itself up to research. Marketers are already using the virtual world to test campaigns, packaging, and consumer satisfaction. Pepsi (PEP) famously tracks use of its products in There.com. Architects seek reaction to design. Starwood Hotels (HOT) test-marketed its new loft designs in Second Life (see BusinessWeek.com, 8/23/06, "Starwood Hotels Explore Second Life First").

Continued in article

Bob Jensen's threads on tools and tricks of the trade are at
http://www.trinity.edu/rjensen/000aaa/thetools.htm

Summarizing Academic Accounting Research for Practitioners

April 14, 2007 message from Ron Huefner [rhuefner@acsu.buffalo.edu]

The Journal of Accountancy (AICPA) has begun a new series of articles to review accounting research papers and explain them to practitioners. The April issue has an article on "Mining Auditing Research."

It summarizes about a dozen research articles, mostly from The Accounting Review, but also including articles from JAR, CAR, AOS, and the European Accounting Review.

The link for this article is: <http://aicpa.org/pubs/jofa/apr2007/boltlee.htm> 

This may be useful in bringing research findings into classes

Ron

March 2007 Updates on the Sad State of Accounting Research in Academe --- http://www.trinity.edu/rjensen//theory/00overview/theory01.htm#AcademicsVersusProfession

Nearly two years ago I sent out an "Appeal" for accounting educators, researchers, and practitioners to actively support what I call The Accounting Review (TAR) Diversity Initiative as initiated by last year's American Accounting Association President Judy Rayburn --- http://www.trinity.edu/rjensen/395wpTAR/Web/TAR.htm

In it I noted that a bright ray of hope for changing narrow focus of The Accounting Review (TAR) was the appointment of Bill McCarthy as Associate Editor for purposes of introducing Accounting Information Systems research into TAR.

I now have an expanded paper written in partnership with Jean Heck --- http://www.trinity.edu/rjensen/395wpTAR\03MainDocumentMar2007.htm
The MS Word version is at http://www.trinity.edu/rjensen/395wpTAR\395wp.doc
This paper is forthcoming in the December 2007 edition of the Accounting Historians Journal

March 27, 2007 message from McCarthy, William [mccarthy@BUS.MSU.EDU]

This thread and other AECM posts regarding information technology research in accounting casts a grim picture for people who wish to do computer science related work aimed at the major accounting academic journals. This has been an "us vs. them" problem for most of my 30 years in AIS research.

While it is indeed true that JAR, JAE, and the other private accounting journals remain in the Stone Age as far as accounting technology issues are concerned, there have been significant steps taken by TAR to open up the main AAA journal to this kind of work. Dan Dhaliwal appointed me as an editor with the express purpose of having a person knowledgeable in information systems and computer science research methods available to the AIS research community for manuscript review and decision-making.

Surprisingly, as I have outlined at both the sectional and national AAA meetings, the problem has not been as much with "them" as it has been with "us," at least in the last 15 months or so. Quite simply, the number of AIS submissions to TAR has been alarmingly low. In Washington last August, I set a target of 12-18 for the AIS community for this academic year, a number I thought was modest and achievable. However, it does not look like we will come close to that at our present rate.

*

As I mentioned in Washington, the submission procedure is this:

*

Do the work and make sure it is rigorous according to accounting, IS, and/or computer science standards,

*

Submit the paper and note or show that it deals with an important accounting issue issue by using AIS, MIS or CS methods, and

*

Ask that the paper be assigned to me as the editor most familiar with IS and CS methods.

If you make a convincing case on these points and if the senior editor thinks it is high quality, then I get it, I assign the referees, and I get to make the consolidated judgment.

Paraphrasing the famous Canadian hockey player Wayne Gretzky, the AIS research and the accounting practice communities will miss on 100% of the good ideas that never get submitted to TAR. If we want change the face of accounting research, the time for action is now. Do the work and submit "that" paper. Additionally, send your name off to me as a possible referee, outlining your particular expertise in either methods or specific technologies.

Bill McCarthy,
Michigan State University

mccarthy@bus.msu.edu 
http://www.msu.edu/user/mccarth4 <https://mercury.bus.msu.edu/exchweb/bin/redir.asp?URL=http://www.msu.edu/user/mccarth4>

March 27, 2007 reply from Paul Williams [Paul_Williams@NCSU.EDU]

Bill,

What we may be paying as the price for dragging doctoral education in accounting back to the Stone Age about 40 years ago, is the phenomenon you describe. People have become so disenchanted with TAR that they have found other more comfortable venues for pursuing their work. In spite of public declarations about the new openness, we have heard this before only to have it turn out to be disengenuous PR. I think your appeal here might encourage people to trust you once and submit a paper, BUT it better produce some postitive experiences.

Another issue is "rigor." Everything must be RIGOROUS, but most GOOD IDEAS aren't "rigorous". They are typically fraught with error, but they open new vistas and ways of thinking about things. The history of science is filled with tales of earth changing ideas that were not offered in a RIGOROUS way (we know Mendel fudged his data on sweet peas, so did Milliken and Keynes General Theory... was notoriously cobbled together). We have become so fixated on method and our public appearance as rigorous scientists that all accounting scholarship in the U.S. at least follows the same template. Our idea of rigor is, frankly, naïve, based more on appearance than substance. Robert Heilbroner once remarked that "Mathematics brought great rigor to economics.

Unfortunately it also brought mortis." Bill, you now have some power (?). Take some chances. What is the point of an academic discourse confined only to statistical model building where, simultaneously, replication is emphatically discouraged? Empirical rigor means doing it over and over by independent investigators with rigorous controls. We may not even be doing what we currently do "rigorously."

March 27, 2007 reply from J. S. Gangolly [gangolly@CSC.ALBANY.EDU]

Methodological hangups, fetish about quantitative rigour, phobia about normative research, all have afflicted most disciplines at one time or the other. We in accounting seem to have them all at the same time.

I remembering sitting on a doctoral committee with folks from psychology, and was frightened to discover my own prejudices after hearing a well known (Skinnerian) psychologist fellow committee member asked me to be a bit more understanding of methodologies used by others.

I have found the accounting crowd reward conformity with received wisdom from the self-anointed sages.

Much of my work has been normative, and therefore considered "unsuitable" for publications in better known accounting journals (statement made by editor of one of the top rated accounting journal). I feel driven out of the field years ago into Operations Research, Information Systems, Computing & Information Sciences.

In none of those fields have the journal editors/ referees used any litmus tests. On the other hand, the referees at an AAA section journal, (about 20 years ago) was bold enough to state that my paper was an insult to the excellent work done by others in the field (the paper was later published in a respected journal in IS with few changes; it was the last paper I submitted to any establishment accounting journals).

Bill's message gives me hope in a way I never imagined. As a test balloon, I will submit TAR one of our papers that I had targeted for a CSI journal.

We need a balance between rigour, relevance, and methodological purity. Above all, we need tolerance for work that differs from our own perspective on each of these. We also need a diversity of approaches to the issues in the papers.

Jagdish

Academics Versus the Profession

During the past several decades, many leading B schools have quietly adopted an inappropriate --- and ultimately self-defeating --- model of academic excellence.  Instead of measuring themselves in terms of the competence of their graduates, or by how well their faculties understand important drivers of business performance, they measure themselves almost solely by the rigor of their scientific research. They have adopted a model of science that uses abstract financial and economic analysis, statistical regressions, and laboratory psychology.  Some of the research produced is excellent, but because so little of it is grounded in actual business practices. the focus of graduate business education has become increasingly circumscribed --- and less and less relevant to practitioners ...We are not advocating a return to the days when business schools were glorified trade schools.  In every business, decision making requires amassing and analyzing objective facts, so B schools must continue to teach quantitative skills.  The challenge is to restore balance to the curriculum and the faculty:  We need rigor and relevance.  The dirty little secret at most of today's best business schools is that they chiefly serve the faculty's research interests and career goals, with too little regard for the needs of other stakehollders.
Warren G. Bennis and James O'Toole, "How Business Schools Lost Their Way," Harvard Business Review, May 2005.
The article be downloaded for a fee of $6.00 ($3.70 to educators) --- http://harvardbusinessonline.hbsp.harvard.edu/b02/en/hbr/hbr_home.jhtml

December 5, 2005 reply from Paul Williams

Bob, Come on! This kind of argument is unfair. You sound like the folks at Rochester. Outcomes I like I attribute to market forces and the private sector; outcomes I don't like are the fault of government meddling. I defy anyone to draw a line that demarcates private from public outcomes. The intertwining of government and economics is today the same as it has always been. Abandoning the messy world of political economy for the mathematically elegant imaginary world of mere economics makes for a nice living for a lot of mathematicians. Since my paycheck is drawn on the account of the State of North Carolina I am legally a government employee. NC State's Centennial Campus is living testament to the impossibility, in a meaningful scientific sense (as opposed to a rhetorical sense), of the distinction between pubic and private. All that exists are organizations within a context of constraints and incentives mutually determined by economic, political, and social forces (if force is the right metaphor).

Paul Williams
paul_williams@ncsu.edu  (919)515-4436

December 6, 2005 reply from Bob Jensen

From the KPMG Audit Report on September 30, 2004 --- http://www.amtrak.com/pdf/04financial.pdf The Company (Amtrak) has a history of substantial operating losses and is highly dependent upon substantial Federal government subsidies to sustain its operations. There are currently no Federal government subsidies authorized or appropriated for any period subsequent to the fiscal year ending September 30, 2005 (“fiscal year 2005”). Without such subsidies, Amtrak will not be able to continue to operate in its current form and significant operating changes, restructuring or bankruptcy may occur. Such changes or restructuring would likely result in asset impairments.

************************

I guess I have to agree Paul that the difference between Amtrak and other businesses, like farmers, dependent upon government subsidies is largely semantic (rhetorical). In a sense, Amtrak is less like Fanny Mae since Amtrak's debt is not guaranteed by the Federal government. It is also less like the U.S. Post Office since Amtrak did sell equity (that has nearly been wiped out by huge deficits). Like the Post Office, Amtrak does negotiate directly with the government for appropriations to a particular business. But unlike the Post Office, I think Amtrak can set prices without an act of Congress.

The lines are indeed fuzzy between government enterprises, private enterprises directly subsidized, private enterprises indirectly subsidized, and the theoretical private firms that have no government subsidies. There may not be any such private firms in modern times since nearly every product or service is indirectly subsidized somewhere along the supply chain.

One possible distinction between public and private enterprises is whether the government is obligated to pay creditors off in full if the enterprise fails. I gather that this is the case for NC state universities, the U.S. Post Office, and Fannie Mae (even though Fanny Mae also sells equity shares). Debt guarantees are not assured in the case of Amtrak such that Amtrak is closer to being private in this context. In this context, classifying public versus private enterprises becomes a sliding scale as to what portion of the debt is guaranteed by the government. Pension guarantees cloud this issue since these are a form of insurance that enterprises must buy into to become partly covered.

I'm not certain where your argument bears much fruit if we don't have some distinction between public and private. If subsidies make every enterprise a government enterprise, wouldn't all businesses become government enterprises? It would not be helpful to have no definition of private enterprise since many equity owners and creditors can still fail and do every day in firms where the government does not guarantee repayment of all debt.

One problem of debt guarantees like we have in Fanny Mae and the Post Office is that managers of those companies can be tempted put their companies in extremely high levels of debt risk because creditors are always willing to loan to the hilt if the government guarantees repayment. Then cowboy managers might be tempted to borrow great amounts to pay for highly inefficient operating costs or make extremely high risk investments (as Fannie Mae did with billions invested in losing manufactured housing mortgages).

When I started this thread I mistakenly thought that Amtrak's debt was guaranteed by the government. What amazes me is how Amtrak is still able to borrow money to finance losing operations. Creditors (who are largely in Canada and France) must have faith that the U.S. government will not allow Amtrak to fail in spite of Amtrak's bleak future for ever earning a profit. Apparently the close association of Amtrak and government make it not like Penn Central in the eyes of lenders.

The Timeline of the Recent History of Fannie Mae Scandals 2002-2008 --- http://www.trinity.edu/rjensen/caseans/000index.htm#FannieMae
"Fannie Mayhem: A History," The Wall Street Journal, July 14, 2008

A huge corporate finance textbook
From Jim Mahar's Blog on October 17, 2005 --- http://financeprofessorblog.blogspot.com/

Vernimmen.com --- http://vernimmen.com/

What a great site!

When I was gone I received a message from the authors of Corporate Finance by Vernimmen, Quiry, Le Fur, and Salvi.

The book, newsletter, and website are all very interesting and useful.

The book is 48 chapters (about 1000 pages) full of corporate finance. I have to agree with the authors "It is a book in which theory and practice are constantly set off against each other...."

I really like it. Especially the emphasis not so much on techniques ("which tend to shift and change over time."

VERY WELL DONE!

Moreover, the authors also put out a monthly newsletter and have a web site that could stand alone as one of the best in the business.

Vernimmen.com --- http://vernimmen.com/

Jensen Comment:
Perhaps intermediate accounting textbooks will one day follow this lead of contrasting theory and practice.

Accentuate the Obvious
Not every scientist can discover the double helix, or the cellular basis of memory, or the fundamental building blocks of matter. But fear not. For those who fall short of these lofty goals, another entry in the "publications" section of the ol' c.v. is within your reach. The proliferation of scientific journals and meetings makes it possible to publish or present papers whose conclusion inspires less "Wow! Who would have guessed?" and more "For this you got a Ph.D.?" In what follows (with thanks to colleagues who passed along their favorites), names have been withheld to protect the silly.
Sharon Begley, "Scientists Research Questions Few Others Would Bother to Ask," The Wall Street Journal, May 27, 2005; Page B1 --- http://online.wsj.com/article_print/0,,SB111715390781744684,00.html
Jensen Comment:  Although some of the studies Begley cites are well-intended, her article does remind me of some of the more extreme studies that won Senator Proxmire's Golden Fleece Awards --- http://www.taxpayer.net/awards/goldenfleece/about.htm
Also see http://www.encyclopedia.com/html/G/GoldenF1l.asp
Accounting research in top accounting journals seldom is not so much a fleecing as it is a disappointment in drawing "obvious" conclusions that practicing accountants "would not bother to ask."  Behavioral studies focus on what can be studied rather than what is interesting to study.  Studies based on analytical mathematics often start with assumptions that guarantee the outcomes.  And capital markets event studies either "discover" the obvious or are inconclusive.

A Populist Movement in Accounting Research

At the 2005 American Accounting Association meetings in San Francisco, the 2005-2006 President, Judy Rayburn from the University of Minnesota, gave a luncheon speech about the State of the AAA.  The AAA is not in the best of shape and comparisons are made with other academic associations in business studies such as finance and management.

What is especially interesting is the current populist movement going on in the AAA.  It is built upon the argument that the AAA journals and meeting programs became too detached from the accounting profession and problems within the profession.  There is a strong movement rising to change the editorial biases of the AAA’s top journals that have been tightly controlled by positivists demanding great rigor in empirical and analytical studies.  One problem is that such demands for rigor have limited researchers to rather uninteresting problems that derive outcomes of little surprise or interest.  In many respects there is a current populist movement with respect to the entire academic tenure and performance evaluation process.   You can read a bit more about this at http://www.trinity.edu/rjensen//theory/00overview/theory01.htm#AcademicsVersusProfession  

August 23, 2005 message from Tracey Sutherland [tracey@AAAHQ.ORG]

Given the lively discussion about Judy Rayburn's luncheon talk in San Francisco, I thought some would be interested in her PowerPoint slides which are posted on the AAA website -- you'll find them at http://aaahq.org/AM2005/menu.htm  . It was great to see many of you at the Annual Meeting -- special thanks to folks for discussing ideas for some of the teaching/learning related sessions developed by the VP for Education -- a session on using games in teaching accounting was an outcome of conversations on AECM.

Best regards, Tracey

Jensen Comment:  Katherine Schipper's Presidential Lecture slides are also available"

Katherine Schipper's Presidential Lecture (PowerPoint Slides)

Judy Rayburn's President's Talk (PowerPoint Slides)

I suspect the AAA is holding off on Denny Beresford's speech until it is determined if Accounting Horizons is going to publish his paper.

Cynthia Cooper’s plenary speech on Wednesday is proprietary and will not be published by the AAA. You can, however, find some of her remarks in various places if you run a search on Google. There is a basketball star by that same name, so I suggest you run the search on “Cooper” AND “Worldcom”.

Cooper was one of Time Magazine's 2002 "Persons of the Year" --- http://www.time.com/time/personoftheyear/2002/

Also see http://www.findarticles.com/p/articles/mi_m4153/is_6_60/ai_111737943

August 23 reply from Ken Crofts [kcrofts@CSU.EDU.AU]

Judy Rayburn’s slides . . . are also interesting, particularly drop in membership of AAA over the years.

Ken

The philosophy of science is a dying discipline
The philosophy of science is a dying discipline in part because it added philosophical terminology and discourse that did not have enough value added to scientists themselves as they got on with the work at hand, particularly social scientists.

Social scientists have moved on from debates over the scientific paradigm. I highly recommend examining how sociologists now proceed without getting all hung up on positivist or anti-positivist dogma --- http://www.trinity.edu/mkearl/methods.html#ms 

I particularly like the following quotation from the above document:

Methodology entails the procedures by which social research, whether  quantitative and qualitative, are conducted and ultimately evaluated--in other words, how one's hypotheses are tested. Getting more specific, researchers' methodologies guide them in defining, collecting, organizing, and interpreting their data. Often the major breakthroughs in our understanding of social processes occur because of the novelty of the data used, the techniques by which it is gathered, or by the model or question directing its acquisition and/or interpretation.  And let's hear it for the findings that don't support the hypotheses at the Journal of Articles in Support of the Null Hypothesis and in the Index of Null Effects and Replication Failures.

Defining one's data: Precisely how does one go about and measure such theoretical concepts as altruistic behavior, esprit de corps, or anomie?  Even such apparent "no brainers" as religiosity, happiness, or social class reveal how methodological adequacy and validity are a function of the clarity of one's theory and its part.  Further, theory tends to be built into our measurement tools.  When, for instance, one measures temperature with a thermometer it is not the temperature per se that one sees but rather a phenomenon (mercury rising within a column) theoretically related to it.

For strategies for data collection see Bill Trochim's Research Methods Tutorials, including material on:

• the classical experiment design 
• sampling
• Polling 101 from the Roper Center
• participant observation
• content analyses of texts, video, television, and even postage stamps
• survey research
• unobtrusive measurements

Thinking about using the web for conducting a survey?  Available online is Matthias Schonlau, Ronald D. Fricker, Jr., and Marc N. Elliott's Conducting Research Surveys via E-mail and the Web.

August 22, 2005 reply from Paul Williams at North Carolina State University

To add a bit more to Michael, Ron, and Bob's comments: Even Popper, by the time he died wasn't a Popperian, but an evolutionary epistimologist. Even he had to recognize the implications of the linguistic turn and, particularly, Paul Feyerabend's (a student of Popper) destruction of the pretenses of method. Bob is right that philosophy of science is a dead horse replaced by a sociology and history of science. Even scientists don't follow the scientific method. Underlying every theory are propositions that don't enter into the specific experiment or hypothesis being tested. I am with Ron, and many others, that rigor is not obtained by running experiments within the context of a theory that has absolutely pernicious underlying presuppostions.
Capital market theory and principal/agent theory are such theories.

The pernicious underlying proposition that is both empirically false (as evolutionary biologists and anthropologists have provided ample evidence of the kind you would consider rigorous) and morally repugnant is that of humans' nature. What we in accounting seem never to consider is what ramifications such presuppositions have for the very culture in which we live. As Ed Arrington labeled it, Watts and Zimmerman are merely Hobbes in drag. Hobbesian human nature was constructed to argue for Leviathan -- self- government is beyond the ken of humans engaged in a war of all against all. Certainly a libertarian philosophy is untenable in a Hobbesian world. Solipsistic, vicious self-maximizers. The
project of the Scottish Enlightenment (of which Thomas Jefferson was a diligent student) was to produce a human being who was capable of being free of the rule of Kings or absolute sovereigns.
 

Jagdish provided us a reference to Sumantra Ghoshal's article "Bad Management Theories Are Destroying Good Management Practices." The bad management theories he speaks of are those of agency theory. Why accounting should have been preoccupied for the last 35 years in substance testing a theory of human nature is one of the great mysteries. Principal/agent theory is a bad theory based on its own empirical pretensions. What kind of Rsquares have we produced? Most of human behavior is left unexplained by the theory. And after this last stock market bubble, does anyone seriously believe in capital market efficiency?
 

How good a "scientific" theory do you have when after 40 years of testing you are still back at square one? And if capital markets aren't efficient, what does that do to the 30 years of "information content" studies predicated on the assumption that markets were at least semi-strong efficient? Let me ask this question, of you and everyone else: How much of what you believe do you believe on the basis of the "empirical evidence?" Very little. Indeed, believing you are a Popperian is a belief not based on empirical evidence. No one did an experiment and proved that Popper was
right.

But what makes capital market theory and principal agent theory bad is what it forces me to believe about myself and Michael and Ron and You, which I will not, nor do I have to, accept. To quote from Michael Shermer's The Science of Good and Evil: "Still, something profound happened in the last 100,000 years that made us -- and no other species -- moral animals to a degree unprecedented in nature (p. 31)." Accounting is a human practice.

It's objects are not atoms, or quarks, or stars, or planets. It's objects are also its subjects (the double hermeneutic that our physicists friends don't have to deal with). A human practice that investigates itself as if human capacities are as impoverished as neo-classicists would have us believe they are (both in terms of doing good and evil) might be missing something exceedingly important to it.
 

Kurt Kleiner, "Most scientific papers are probably wrong," New Scientist, August 30, 2005 --- http://www.newscientist.com/article.ns?id=dn7915&feedId=online-news_rss091

Most published scientific research papers are wrong, according to a new analysis. Assuming that the new paper is itself correct, problems with experimental and statistical methods mean that there is less than a 50% chance that the results of any randomly chosen scientific paper are true.

John Ioannidis, an epidemiologist at the University of Ioannina School of Medicine in Greece, says that small sample sizes, poor study design, researcher bias, and selective reporting and other problems combine to make most research findings false. But even large, well-designed studies are not always right, meaning that scientists and the public have to be wary of reported findings.

"We should accept that most research findings will be refuted. Some will be replicated and validated. The replication process is more important than the first discovery," Ioannidis says.

In the paper, Ioannidis does not show that any particular findings are false. Instead, he shows statistically how the many obstacles to getting research findings right combine to make most published research wrong.

Massaged conclusions Traditionally a study is said to be "statistically significant" if the odds are only 1 in 20 that the result could be pure chance. But in a complicated field where there are many potential hypotheses to sift through - such as whether a particular gene influences a particular disease - it is easy to reach false conclusions using this standard. If you test 20 false hypotheses, one of them is likely to show up as true, on average.

Odds get even worse for studies that are too small, studies that find small effects (for example, a drug that works for only 10% of patients), or studies where the protocol and endpoints are poorly defined, allowing researchers to massage their conclusions after the fact.

Surprisingly, Ioannidis says another predictor of false findings is if a field is "hot", with many teams feeling pressure to beat the others to statistically significant findings.

But Solomon Snyder, senior editor at the Proceedings of the National Academy of Sciences, and a neuroscientist at Johns Hopkins Medical School in Baltimore, US, says most working scientists understand the limitations of published research.

"When I read the literature, I'm not reading it to find proof like a textbook. I'm reading to get ideas. So even if something is wrong with the paper, if they have the kernel of a novel idea, that's something to think about," he says.

Journal reference: Public Library of Science Medicine (DOI: 10.1371/journal.pmed.0020124)

Jensen Comment:  By analogy, this is a black eye against top accounting research journals that refuse to publish replication studies.  It is a special problem for accounting behavior studies where sample sizes and validity are enormous problems.  It may be less of a problem in capital market studies where sample sizes are often huge.  But problems of poor study design and missing variables in models are an enormous in accounting research that tries to be scientific.

Always subject a research conclusion to the so-what test! Even without technical skills you often can question that which your common sense tells you is not correct, although you may have to endure slings and arrows of paranoids in doing so.  Sometimes a child's question is the best kind of question --- http://imagine.gsfc.nasa.gov/docs/ask_astro/answers/011021a.html

Never be overwhelmed by CAPM studies.  The CAPM is such a simplified model (reducing market risk to one index) that most studies based on CAPM are probably correct versus incorrect by sheer chance.  The problem with multiple-index models, in turn, is that there are all sorts of specification problems due missing variables and other things such as the following:

multicollinearity (http://seamonkey.ed.asu.edu/~alex/computer/sas/collinear.html ),

homoscedasticity ( http://davidmlane.com/hyperstat/A121947.html ),

nonstationarity (http://sepwww.stanford.edu/oldsep/matt/sdi/nstat/Fig/paper_html/node1.html)

And there are many other problems that editors often overlook among "members of the club." 

One common problem in our studies that have huge sample sizes is that statistical inference is nonsense.  For example, suppose that we sample 50,000 men and 50,000 women to see if there is a difference in IQ.  Infinitesmal differences may be deemed "statistically significant."  I once had to critique a paper by a renowned researcher in accounting who somehow just did not understand this problem with large samples.

Year 2005 American Accounting Association Annual Meeting in San Francisco August 5-10, 2005
The AAA meetings were very good this year except for the first plenary session. Bravo to Tracie, Dee, and their helpers for great logistics. The Hilton did a great job. Bravo to Jane and her helpers for a great program.

I think Katherine's plenary (Tuesday) session on disclosures will be posted by the AAA. Katherine made reference to quite a lot of academic research. She might also make her PowerPoint file available at the FASB.

I hope the AAA will also post Denny's terrific luncheon speech. If not, I think Denny will share it in some way with all of us on the AECM.

A highlight of the meetings for me was the XBRL workshop conducted by Glen, Roger, and Skip. Eric Cohen also participated with a great demo of Rivet Software's Dragon Tag software which finally makes it possible to teach XBRL hands on to students.

Another highlight was the great debate between Katherine Schipper (for fair value accounting) versus more negative positions taken by Ross Watts and Zoe-Vanna Palmrose. All three did a great (actually unforgettable) job on Monday afternoon.

This 2005 AAA meeting set a record with nearly 2,700 registrations plus over 500 registered guests. This topped the previous record which was also set in San Francisco some years ago. Such a registration number is very high considering that there are only about 8,000 worldwide members of the AAA --- http://aaahq.org/about/financials/KeyIndicators8_31_04.PDF

I returned to Trinity University from New Hampshire today. Trinity is still seeking somebody to fill my chair (the Jesse H. Jones Distinguished Professor of Business Chair) after I retire in May 2006. Anyone interested in applying should contact Dan Walz at 210-999-7289 or dwalz@trinity.edu I am very grateful to have had the privilege to fill it for 24 years.

Life is good!

August 13, 2005 reply from Glen Gray [glen.gray@CSUN.EDU]

Gee, thanks for your kind words regarding our XBRL workshop.

For those who want to know more about XBRL, you should:

See XBRL cover story in August 2005 Journal of Accountancy at http://www.aicpa.org/pubs/jofa/aug2005/tie.htm 

Visit http://www.xbrl.org  -- includes general and technical information about XBRL

Check out the 5-years of XBRL abstracts at http://bryant2.bryant.edu/~xbrl/index.html 

Review FAQs at http://xbrl.edgar-online.com/x/faqs/  , which cover a broad range of XBRL questions

Visit http://www.xbrlspy.org/  , a blog-like coverage of XBRL 

Check out the free XBRL teaching materials that will be available (Sept 1) at www.eycarat.ku.edu/XBRLClassMaterials

Bob Jensen's threads on XBRL are at http://www.trinity.edu/rjensen/XBRLandOLAP.htm#TimelineXBRL

Bob Jensen's threads on fair value reporting are at http://www.trinity.edu/rjensen//theory/00overview/theory01.htm#FairValue

August 15, 2005 reply from McCarthy, William [mccarthy@BUS.MSU.EDU]

I agree that some of the annual meeting sessions mentioned already were quite good this year, but for me, the clear highlight of the convention was the policy speech given by new AAA president Judy Rayburn at the Wednesday luncheon.

Judy made a strong case for expanding the scope and volume of the AAA journal set by using comparisons to publication trends and citation trends in management, marketing, and finance. She also mentioned some specific AAA committee work that was going to assess these matters. Judy finished by coming down to the floor and answering all individual questions on rather difficult matters such as the acceptability of research paradigms from other countries and disciplines, and the effect of expansion on AAA section journals.

Many attendees did not have a ticket to the Wednesday luncheon, but I am sure Judy's slides will be made available to all.

Bill McCarthy
Michigan State

August 15, 2005 reply from Ali Mohammad J. Abdolmohammadi

I agree with Bill. While I found many presentations to be excellent this year, I was particularly impressed with Judy Rayburn's luncheon policy speech on Wednesday. I found the speech to be honest and gutsy. My nonscientific observation of the crowd was that the speech resonated well with the majority. It'll take a lot of hard work to make serious changes to the current publication culture of AAA journals, but it is well worth trying.

Ali Mohammad J. Abdolmohammadi, DBA, CPA
http://web.bentley.edu/empl/a/mabdolmohamm/ 
John E. Rhodes Professor of Accounting
Bentley College
175 Forest Street
Waltham, MA 02452

Fraudulent Conferences that Rip Off Colleges:  Do you really want to participate in these frauds?
I've written about this before, but I want to elaborate.  Academics either unwittingly or willingly sometimes allow themselves to get caught up in fraudulent "conferences."  Spam is on the rise for these frauds.  The degree of fraudulence varies.  At worst, there is no conference and organizers merely charge an exorbitant fee that allows the paper to be "refereed"  and published in a conference proceedings, thereby giving a professor a "publication."  See http://lists.village.virginia.edu/lists_archive/Humanist/v18/0633.html

Even when the conferences meet, they may be fraudulent.  Generally these conferences are held in places where professors like to travel in Europe, South America, Latin America, Las Vegas, Canada, the Virgin Islands, or other nice locations for vacations that accompany a trip to a conference paid for by a professor's employer.  The professor gets credit for a presentation and possibly a publication in the conference proceedings. 

But wait a minute!  Here are some warning signs for a fraudulent conference:

1. Even though there is a high registration fee, there are no conference-hosted receptions, luncheons, or plenary sessions.  The conference organizer is never called to account for the high registration fee.  The organizer may allude to the cost of meeting rooms in a hotel, but often the meeting rooms are free as long as the organizer can guarantee a minimum number of guests who will pay for rooms in the hotel.
    

2. All or nearly all submissions are accepted for presentation.
    

3. The only participants in most presentation audiences are generally other presenters assigned to make a presentation in the same time slot.  There is virtually no non-participating audience.  Hence only a few people are in the room and each of them take turns making a presentation.  Most are looking at their watches and hoping to get out of the room as soon as possible.
    

4. Presenters present their papers and then disappear for the rest of the conference.  There is virtually no interaction among all conference presenters.
    

5. The papers presented are often journal rejects that are cycled conference after conference if the professor can find a conference that will accept anything submitted on paper.  Check the dates on the references listed for each paper.  Chances are the papers have few if any references from the current decade.
    

6. These conferences are almost always held in popular tourist locations and are often scheduled between semesters for the convenience of adding vacation time to the trip.  They are especially popular in the summer.

Bob Jensen's threads on various types of fraud in academe are at http://www.trinity.edu/rjensen/FraudReporting.htm

August 17, 2005 reply from Jagdish Patha

Bob:

I was about to be fleeced by one such conference cheat claiming himself some Dr.----. generally organizes conferences at almost all the exotic locations of US, Cancun, Venice etc. This organizer double blind peer reviewed my submission (almost 35-40 pages) within 52 hours! Asked for per page charges if required to be placed in "proceedings" which happens to be a CD-ROM. This organizer has also got 4-5 journals which can ultimately accommodate any paper written from any angle of any sphere of business. You may get into any journal of your choice which will claim to be "double blind peer reviewed'!

I wish there should be some agency of regulators who can tame them. These people are bogus, there conferences are bogus and often I feel that what will be the face of a person who will come out and claim a paper presented and published in such bogus outlet to be considered suitable for tenure and promotion!

Jagdish Pathak, PhD
Guest Editor- Managerial Auditing Journal (Special Issue)
Associate Professor of Accounting & Systems Accounting & Finance Area
Odette School of Business
University of Windsor 401 Sunset Windsor, N9B 3P4, ON Canada

August 17, 2005 reply from David Albrecht

My answer is at the bottom of the paper, but please read my supporting argument.

Generally speaking I am not in favor of my department funding conference presentations for other faculty. I just don't think much is gained from it, and it is a very expensive CV line. I'd say that a lot of sponsored conferences haven't distinguished themselves from the rip-offs. However, the research-oriented faculty at my school are funded to attend conferences and conference presentations are the name of the game. So like it or not, I have to play the game.

But are quality conferences, such as AAA conferences, a rip-off? Is the phrase quality conference an oxymoron for the AAA? Here's my experience at the recent AAA in San Francisco. Tell me what you think.

I'm really upset with people making presentations, but then refusing by their actions to share their paper with members of the audience. I attended research presentations at eight of the nine time slots in SF, and tried to surf over to a simultaneous session a couple of times. In all of the sessions I attended, only 2 of 30 presenters had copies of the paper to distribute. The responsible presenters (both in education-related sessions) were Freddie Choo and the co-authoring team of Elizabeth Haywood, Dorothy McMullen and Donald Wygal. In the non-education related sessions I attended, there were no available copies of any paper. I then had to approach each presenter afterward and ask for a copy of the paper to be sent to me (seems reasonable that they would be available, as the papers had to be submitted 8-9 months in advance). Not one of the non-education presenters has sent anything to me. This is my usual experience. A few years ago I asked for a copy of a conference paper, and was assured that I would be sent one. Stereotypically, I received an e-mail two years later informing me that the paper was now available in some journal's most recent edition, and I was free to track it down. Of course, I was thanked for my interest in the paper.

Most of the time when someone says that I will sent a copy of the paper, it is an empty promise apparently designed to get rid of me. I hardly ever get one.

If one of the purposes of the AAA is to share research, then why are most of the presenters so proprietary and reluctant to share details? I don't think that much knowledge is shared when a presenter makes a very brief presentation using ineffective public speaking methods and then has no copy of the paper to share.

I've attended three conferences so far this year, two of which I had to pay for myself. In the Ohio AAA regional (BGSU paid for this one) there were no copies available, but Tim Fogarty was very good in sending me a copy of each of his papers presented. I learned so much from actually reading the papers. At a second conference, I think I was the only presenter at the conference to bring copies for attendees. I asked a few people for a copy his/her paper, but I have yet to be sent one. In the third conference, the SF AAA, I haven't received any requested papers from any concurrent session presenter* except for Tom Buttross, and his paper is education-related.

The teaching-related forums put on by the T&C section (the best section of the AAA, IMHO) were good, and it's my guess that about 20% had some write-up or paper to share at the forums. I picked up material there from Torben Thomson, the co-authoring team of Graeme Dean, Sandra Van Der Laan and Cameron Esslemont, the co-authoring team of Patsy Lee, Cheryl Prachyl and Carol Sullivan, the team of Gary Siegel & Gail Kucuiba, the team of Paul Mihalek, Milo Peck and Patricia Poli, the team of Elsie Ameen, Daryl Guffey and Cynthia Jackson, the team of Violet Rogers and Aileen Smith, the team of Michael Garner, Karen Papke-Shields, Ellen Pettingill and Denise Rotondo, and the sole author Christie Johnson. Well, maybe the rate is closer to 10%.

Following the conference, I've received materials from teaching forum participants George Schmelzle, Wendy Tietz, Gail Kucuiba, Yan Bao and Angela Lee. If I've misclassified anyone, I'm sorry.

My point is, the lid seems to be open for people eager to share their teaching ideas, but when it comes to the research-oriented presenters I'm SOL. Ironic, given that the major reason I attended AAA was to get caught up on financial reporting and auditing research ideas. Oh, I got my money's worth from the people mentioned above (as well as Thomas Calderon and Denny Beresford), but I really wish the conference would have been more research-oriented.

So, are AAA conferences rip-offs? Not entirely, but pretty much so. And since I spend my own money to attend them, I'm much less likely to attend one in the future.

David Albrecht

August 17, 2005 reply from Amy Dunbar [Amy.Dunbar@BUSINESS.UCONN.EDU]

David,

Although I agree that a paper should be available to you, I do not agree that the paper should be available in paper form. Rather, the links to the papers should be provided by the author. Requiring the author to haul papers to the conference is unreasonable, imo, but I think the authors should provide a handout with the title of the paper, the abstract, author information, and a link to the paper. As Bob Jensen mentioned in an earlier posting, an author can easily put a file on his/her web server. Personally, I would prefer to see links to the papers on an electronic version of the AAA program, but many argue that such availability could be construed to be a “publication” of the paper. I find this reasoning suspect because no one has a problem with SSRN postings.

I missed this AAA conference for the first time in years, and I really regret not being able to go. I find the meetings very useful, not only for the various sessions, but also from a networking perspective. This year, I heard there were also excellent CPE sessions. Far from being a “rip-off,” the AAA annual meeting is a valuable resource that takes incredible time on the part of the faculty volunteers who organize that meeting with the help of the AAA staff.

Amy Dunbar

UConn

August 18, 2005 reply from Bob Jensen

Hi David,

Although I disagree with the general negativism of your opinions about the AAA annual meetings, I will begin with one item of support.  Years ago when these meetings were held in San Diego, a CD recording company recorded every session (concurrent sessions to panel discussions to luncheons to plenary sessions).  The company had a booth were participants could buy the CD after each session at a rather modest cost  The sad part was that there was almost no demand to buy the CDs, especially the CDs from the research presentation sessions.  The reasons for this are unknown.  My own conclusion is that this is no fault of the AAA.  The problem is accounting research itself.  Most of it is just not very interesting whether or not it is presented at an AAA meeting.

The CD recording company lost a bundle on this venture and since then no effort is made to record AAA meeting sessions other than occasional plenary and luncheon sessions that are captured by the AAA itself on video as part of the projection system for large audiences.

There is a general lack of interest in accounting research.  Amy mentioned the SSRN working paper series --- http://www.ssrn.com/ . The big sellers in SSRN are economics and finance papers.  Demand for accounting research is dismal, especially when you factor out those papers billed as accounting papers that are economics research papers in accounting clothing.  I can't get the ranking system to work this morning, but the last time I looked there was not a single accounting paper in the SSRN listing of top downloads ---
http://papers.ssrn.com/sol3/topten/topTenResults.cfm?groupingtype=3&groupingId=1

I discuss problems with accounting research at http://www.trinity.edu/rjensen//theory/00overview/theory01.htm#AcademicsVersusProfession
The biggest problem is that our accounting journals themselves do not even judge it worthy to publish research  replications.  If our findings were really of interest our journals would be like science journals that actively seek out replications of findings in science.

Your comments focus on whether the benefit of sending a professor to the AAA meetings justifies the cost.  If we had interactive teleconferencing or Webcasting of sessions available, perhaps you would be correct in terms of the sessions themselves.  But this fails to weigh in the many other benefits of the AAA meetings, benefits that include the following:

• Networking, especially encounters with old and new friends.  A scheduled or chance encounter during the meetings often changes the entire career path of a professor, especially in terms of relocation.  Many of my best friends and correspondents over my entire career came from encounters at AAA meetings.  My close relationship with Amy Dunbar began when she was in one of my CEP technology sessions years ago at an AAA meeting.  Subsequently she became a presenter in some of my annual programs.  My close relationship with Denny goes clear back when he was still an Ernst and Ernst Research Partner who attended every AAA annual meeting --- I'm talking almost 100 years ago.
   
• Interfacing of academia with the public accounting profession, the business community, the publishers, the technology vendors, and the professional associations like the AICPA, IMA, IIA, Certified Fraud Examiners, and others.  We also have interfacing with members of the various section groupings such as the Teaching and Curriculum Section.
   
• Interfacing between U.S. accounting professors and international accounting professors.  The AAA annual meetings are probably the main reason why the AAA has become the leading international society for accounting educators and researchers.  Partly because the 2005 meetings were in San Francisco, the registration of Asian accounting educators was especially high and contributed to the record setting number of registrations.
   
• Serendipitous discovery of a research idea or teaching tool.  An immense amount of communication takes place at these meetings.  We get many course and curriculum changes throughout the world from these meetings.
   
• Discovery of new textbooks and other teaching/learning aids, especially the opportunity to fiddle around with new software that vendors have set up on computers in the booths. 
   
• The opportunity to question authors and presenters.  The amount of time allotted to this varies from session to session, but I certainly asked some questions and got some good and bad answers.  It also helps to listen to the answers given to questions raised by other people in the audience.
   
• The opportunity to present your own research or teaching ideas.  Your comments are all taken from the viewpoint of somebody in the audience.  Why did you not try to get on the program or made a CEP presentation?  Perhaps you should propose a session devoted to how to improve the AAA meetings!
   
• The opportunity to vent frustrations.  This has taking place especially with gender issues and public interest accounting, and the sessions that I attended in these areas have gotten better and better each year.  A public interest presentation by Carol Lawrence on on Monday afternoon will stick in my mind the rest of my life.  It was entitled "Art and Semiotics:  Signs, Symbols, Smoke, and Mirrors." 
   
• I might add that Carol's presentation was a highly visual presentation that would be very hard to present in a hard copy paper.  It could be done in video, which is one of the many reasons why I video most sessions that I attend.  There are sometimes presentations that just cannot be captured in hard copy.  I have hundreds of video tapes of AAA meeting sessions that I've captured over the years.  I plan to donate these to the video archives at the University of Mississippi in the near future.  An interesting research topic for some of you might be to examine these tapes in an effort to determine what constitutes a bad presentation versus a good presentation.  I have filmed scores of both types of presentations.  (The University of Mississippi now has the largest archive of accounting history in the world, including the recent gift of the entire AICPA library).

I think you're asking too much in benefits from of the AAA meetings.  Such meetings serve many audiences from Glendale Community College to Ivy League research centers.  Such meetings serve many interests from teaching ideas to empirical/analytical research methods to issues of great concern in accountancy and business in the real world (that "other world").   Such meetings serve many audiences from the U.S. to Europe, to India, to Africa, to Russia to Japan to China to Kangaroo and Kiwi lands.

All we can expect from the AAA meetings are peep holes to opportunities, knowledge, and happenings in our corner on the world of teaching and research and professional practice.

Lastly David, I might add that the annual AAA meetings pass the market test.  Thousands of people would not take the time, trouble, and cost to come to these meetings from all over the world if they were not serving an important purpose.  You have every right to protest in an effort to make the meetings better.  However, I’m afraid that you must first demonstrate how to make accounting research itself better.

Bob Jensen

August 18, 2005 reply from Ruth Bender [r.bender@CRANFIELD.AC.UK]

The European Accounting Association has the papers available for download from its website before the conference and for a week after the conference has ended. My experience was that about 90% of what I wanted was available, and a couple of other authors who I emailed for papers were happy to oblige. Likewise, when I was emailed for a paper about a month after the conference, I sent it by return.

The great advantage of having downloads available before the conference was that it meant that the discussion at sessions could be a bit better informed.

Mind you, I do wish you'd stop putting down the 'Fraudulent Conferences'. One of my minor enjoyments on a wet English morning is looking at that conference email and working out which exotic locations I could possibly get Cranfield to pay for me to visit :-)

Regards Ruth

Dr Ruth Bender
Cranfield School of Management

Thursday, April 28, 2005
The Chronicle of Higher Education
Business Schools' Focus on Research Has Ensured Their Irrelevance, Says Scathing Article
By KATHERINE S. MANGAN

Business schools are "institutionalizing their own irrelevance" by focusing on scientific research rather than real-life business practices, according to a blistering critique of M.B.A. programs that will be published today in the May issue of the Harvard Business Review.

The article, "How Business Schools Lost Their Way," was written by Warren G. Bennis and James O'Toole, both prominent professors at the University of Southern California's Marshall School of Business. Mr. Bennis is also the founding chairman of the university's Leadership Institute, and Mr. O'Toole is a research professor at Southern Cal's Center for Effective Organizations.

Mr. Bennis and Mr. O'Toole conclude that business schools are too focused on theory and quantitative approaches, and that, as a result, they are graduating students who lack useful business skills and sound ethical judgment. The authors call on business schools to become more like medical and law schools, which treat their disciplines as professions rather than academic departments, and to expect faculty members to be practicing members of their professions.

"We cannot imagine a professor of surgery who has never seen a patient or a piano teacher who doesn't play the instrument, and yet today's business schools are packed with intelligent, highly skilled faculty with little or no managerial experience," the two professors write. "As a result, they can't identify the most important problems facing executives and don't know how to analyze the indirect and long-term implications of complex business decisions."

While business deans pay lip service to making their courses more relevant, particularly when they are trying to raise money, their institutions continue to promote and award tenure to faculty members with narrow, scientific specialties, the authors contend.

"By allowing the scientific-research model to drive out all others, business schools are institutionalizing their own irrelevance," the authors write.

Most business problems cannot be solved neatly by applying hypothetical models or formulas, they say. "When applied to business -- essentially a human activity in which judgments are made with messy, incomplete, and incoherent data -- statistical and methodological wizardry can blind rather than illuminate."

Not surprisingly, the head of the association that accredits business schools in the United States disagrees with the authors' assessment. John J. Fernandes, president and chief executive officer of AACSB International: the Association to Advance Collegiate Schools of Business, said most business schools today are making an effort to teach broad skills that are directly applicable to real-world business practices.

He pointed out that in 2003, the association updated its accreditation standards to emphasize the teaching of "soft skills" like ethics and communication, and to require that business schools assess how well students are learning a broad range of managerial skills.

"I think the authors are looking at a very limited group of business schools that emphasize research," said Mr. Fernandes. "Most schools have done an excellent job of producing graduates with a broad range of skills who can hit the ground running when they're hired."

Mr. Bennis and Mr. O'Toole are not convinced. They say that business schools, which in the early 20th century had the reputation of being little more than glorified trade schools, have swung too far in the other direction by focusing too heavily on research. The shift began in 1959, they say, when the Ford and Carnegie Foundations issued scathing reports about the state of business-school research.

While the Southern Cal professors say they do not favor a return to the trade-school days, they think business schools, and business professors, have grown too comfortable with an approach that serves their own needs but hurts students.

"This model gives scientific respectability to the research they enjoy doing and eliminates the vocational stigma that business-school professors once bore," the article concludes. "In short, the model advances the careers and satisfies the egos of the professoriate."

The authors point out a few bright spots in their otherwise gloomy assessment of M.B.A. education. The business schools at the University of California at Berkeley and the University of Dallas are among those that emphasize softer, nonquantifiable skills like ethics and communication, they write. In addition, some business schools operate their own businesses, such as the student-run investment fund offered by Cornell University's S.C. Johnson Graduate School of Management.

Learning at Research Schools
Versus "Teaching Schools"
Versus "Happiness"
With a Side Track into Substance Abuse

"The Case Against Case Studies:  How Columbia's B-school is teaching MBAs to make decisions based on incomplete data," by Geoff Gloeckler, Business Week, January 24, 2008 --- http://www.businessweek.com/magazine/content/08_05/b4069066093267.htm?link_position=link1

Shortly after R. Glenn Hubbard took over as dean of Columbia Business School in 2004, he began hearing rumblings from executives about the quality of MBA graduates. They were undoubtedly smart but often unprepared to handle the most crucial of managerial responsibilities: quickly solving problems with less than perfect information. Among those wanting more from new hires is Henry Kravis, co-founder of the private equity firm Kohlberg Kravis Roberts. "I want to see MBAs who can jump in and make decisions, not jump in and learn to make decisions," he says.

Hubbard made his own executive decision. He devised a new twist on the case study—the teaching format invented by Harvard Business School almost a century ago and used by most B-schools. Hubbard's so-called decision brief offers less information about a situation than the case study, and it doesn't present the solution until students have grappled with the issues on their own. "We want our students to be used to dealing with incomplete data," Hubbard says. "They should be able to make decisions out of uncertainty."

Even Michael J. Roberts, the executive director of the Arthur Rock Center for Entrepreneurship at Harvard and author of more than 100 HBS case studies, acknowledges the potential benefits of Hubbard's approach, which was introduced to Columbia students last fall. "Framing problems and finding the data to analyze those problems is a skill that MBAs need and that the classic case doesn't fully exploit," Roberts says. Hubbard expects such endorsements, as well as those of companies, will encourage other business schools to make room one day for Columbia's decision briefs in their curriculums. Hubbard, at least initially, doesn't plan to sell the decision briefs but to use them to tap into faculty research.

Hubbard isn't giving up on the traditional case study altogether. As part of an initiative called CaseWorks, Columbia will produce cases designed to reflect contemporary issues (which other schools do already), while also creating decision briefs that do away with the Harvard formula (which no one else has done). To help guide the program, Hubbard has turned to two people familiar with the deficits of the old methods: Stephen P. Zeldes, who has been at Columbia for more than a decade and is now chairman of the economics department at the B-school, and former Harvard case writer Elizabeth Gordon.

TOO MUCH INFORMATION The stock case study presents a tidy narrative arc, with a protagonist and a clear story line. One of the more widely used HBS cases focuses on Intel's (INTC) former marketing vice-president, Pamela Pollace, as she decides whether Intel should extend the "Intel Inside" branding campaign to products other than computers. In 24 pages, students are provided with information on Intel and the history of microprocessors, as well as details about market share and segmentation. Pollace's major concern, they learn, is brand dilution; the potential reward is likely worth the risk. In effect, the students are guided along the decision-making process.

If this case were a Columbia decision brief, students might see a video interview in which Pollace describes the challenge. They would also be given a few documents on the background of the campaign itself—the same data a manager at the company would have, but no more. Then, students would discuss possible solutions. Afterward, the group would see a second video of Pollace explaining how she handled the issue before debating whether or not she made the right decision.

So far, Columbia has produced six briefs that take on of-the-moment business challenges: Among them is one that focuses on General Electric's (GE) business-process-outsourcing division in India. Given increased competition, the company needed to consider a bigger investment, as well as the possibility of serving non-GE customers. With just a little more information than that, students are asked to come up with various strategies. "The idea is to try to simulate what it will be like in a real workplace," says Gordon. "There is uncertainty, things aren't predigested, all the information won't be there."

The first field test for the new teaching technique will be this summer, when the MBAs head out to their internships. At Goldman Sachs (GS), which hires more Columbia interns than any other company, the co-head of campus recruiting, Janet Raiffa, hopes to encounter students who are more independent thinkers. As for Kravis, his firm doesn't employ summer interns.

In some ways the pedagogy proposed by Columbia is a shorter and cheaper version of the BAM approach first proposed by Catanach, Croll, and Grinacker. The BAM approach uses a year-long case and students can seek out data in virtually every way they will do it later on while on the job (including paying for data if necessary) --- http://www.trinity.edu/rjensen/265wp.htm

Bob Jensen's threads on Learning at Research Schools Versus "Teaching Schools" Versus "Happiness" With a Side Track into Substance Abuse --- http://www.trinity.edu/rjensen/Theory01.htm#Happiness 

If you connect students to the real world, will they be happier?
Somehow it's nice to know that accountancy schools are not alone in this dilemma!

"If You Teach Them, They Will Be Happy," by Jennifer Epstein, Inside Higher Ed, June 19, 2007 --- http://www.insidehighered.com/news/2007/06/19/lawstudents

Law students — and the lawyers they become — are notoriously unhappy, but the interests of their professors could make all the difference in helping them through law school and in preparing them to be good lawyers.

A study published this month in the Personality and Social Psychology Bulletin compared recent classes at two law schools with almost identical average undergraduate grade-point averages and LSAT scores and found that students at the school that encouraged its professors to be good teachers rather than good scholars reported higher levels of well-being and competence, and scored higher on bar exams.

The study, “Understanding the Negative Effects of Legal Education on Law Students: A Longitudinal Test of Self-Determination Theory,” was conducted by Kennon M. Sheldon, a psychology professor at the University of Missouri at Columbia, and Lawrence S. Krieger, a law professor at Florida State University.

Students at both law schools entered with similar statistics: average undergraduate GPAs around 3.4 and LSAT averages near 156. The schools differed significantly, however, in overall ranking. Law School 1 (LS1), with a good reputation and an emphasis on faculty scholarship, ranked in the second tier (as defined by the study) while Law School 2 (LS2), with an emphasis on hiring and training faculty to be good teachers, ranked in the fourth tier.

Twenty-four percent of the Law School 2 graduates who took the bar exam in the summer of 2005 had “high” scores above 150, compared to 14 percent of Law School 1 graduates. Nearly half of Law School 1’s graduates, meanwhile, had “low” scores – below 130 – on the bar exam, compared with 22 percent of Law School 2’s graduates. Though the scoring statistics are representative of each law school overall, rather than just those students who participated in the study, they are “strongly suggestive that the teaching and learning at LS2 may be more effective,” the authors wrote.

Krieger, one of the authors, said in an interview that it was “almost shocking” to see “how significantly the fourth tier students outperformed the second tier law students on the bar.” But, he added, “it makes sense psychologically – the students at the fourth tier school were happier – and it makes sense that they would have learned more from better teachers.”

By the third year of law school, students at Law School 2 reported significantly higher levels of “subjective well-being,” autonomy and competence than students at Law School 1.

But Ann Althouse, a professor at the University of Wisconsin Law School in Madison said that though it is “intuitively right that the school that emphasizes teaching is the one with students who are happier and score better,” those students may not be better off in the long run.

She said that if all a law school expects of its faculty is to teach, then they can “put more time into teaching students to be lawyers, but not necessarily how to think like lawyers.”

In February, Althouse, a blogger on law and current events, was a month-long guest columnist for The New York Times. In one column, she wrote that while “law should connect to the real world … that doesn’t mean we ought to devote our classes to the personal expression of law students.” Rather, she said, law professors should “deny ourselves the comfort of trying to make [law students] happy and teach them what they came to learn: how to think like lawyers.”

Continued in article

June 23, 2007 reply from Dan Stone, Univ. of Kentucky [dstone@UKY.EDU]

Hi all,

Regarding Ken Sheldon & Lawrence Krieger's law school study (actually, they have published two studies on this topic: the one that Bob cites is their second published study.)

Professor Althouse's assertion that the students at the teaching school may not be learning "how to think like lawyers" suggests that she has not read this study carefully. The students at the teaching school were not only happier they also scored HIGHER on the bar exam. Therefore, unless Professor Althouse argues that the bar exam doesn't test critical thinking skills her argument doesn't accord to the data.

So, perhaps one need not be unhappy to be a competent professional? Perhaps at least some professor-induced suffering merely creates unhappiness and doesn't improve the quality of the "product"? Ok, now I am overstepping the data.....

FYI, I saw Ken present this paper a few weeks ago at the self-determination theory conference and was left wondering if similar results hold for professional accountancy programs. I chatted with Ken about this and he is also interested this topic.

Relatedly, there is some evidence that lawyers have higher alcohol and drug use rates than do some other professionals (though I can't recall the cites just now).

Best,

Dan Stone

Reply from Bob Jensen

Thank you Dan for that helpful and somewhat personalized reply. Here are a couple of citations of possible interest with respect to lawyer substance abuse:

Title:  Substance Abuse in Law Schools: A Tool Kit for Law School Administrators
Authors: Orgena Lewis Singleton JD, Alfred "Cal" Baker L.C.D.C., more...
Publication Date: December 2005, American Bar Association
ISBN: 1-59031-628-2
Topics: Law School, Law Students, Lawyer Assistance Programs, Legal Education & Admissions to the Bar
URL:  Click Here
Also see "Torts, Trials and ... Treatments," by Elia Powers, Issues in Higher Ed, January 4, 2007 --- http://www.insidehighered.com/news/2007/01/04/lawschool

The ABA report argues that the quality of the legal profession is affected by lawyers who “are impaired as a result of abuse of alcohol and drugs.” One of the co-authors who spoke at Wednesday’s meeting in Washington, Cal Baker, is a recent law school graduate and director of a company that provides chemical dependency treatments.

Baker, a recovering alcoholic, said alcohol and drug abuse are the two top problems he sees among law students. (Other panelists said students often report depression and extreme anxiety, as well as substance abuse issues. ) He said he would have been unable to recover from his condition while in school, because nearly all the planned social activities were centered around bar nights.

One of the largest hurdles, Baker said, is convincing students that admitting their drinking problems won’t lead to disciplinary action. Many who have previous alcohol-related citations are concerned about their professional futures.

Continued in article

I do not know of comparable studies in the accounting profession. I do know that substance abuse is a problem on two levels for accountants, particularly auditors who are away from home a lot of the time. At level one is the professional away from home more than many other professionals. At level two is the family of a professional who is absent from home much of the time.

Some large CPA firms have hot lines where professionals and their family members can seek counseling with complete confidentiality and possible anonymity. These hot lines link directly with medical and family counseling professionals who are outside the firm itself but are paid by the firm. I'm told that an overwhelming proportion of the problems dealt with are substance abuse and troubled family members.

I suspect that these are problems that are not dealt with at all well in our schools of accountancy. One problem is that we want to attract students to this profession and do not like to dwell on the dark side of this profession's troubles. There are substance abuse problems in all professions. It would be interesting to study whether some professions tend to keep substance abuse problems in dark closets more than other professions. For example, perhaps there is more perceived sensitivity among clients/patients who are more afraid of substance abusers in accounting and medicine relative to law. That is only a personal observation and not something that I've studied. My guess is that substance abuse is highest among physicians and highest in terms of keeping their dependencies secret.

A more general site on substance abuse is provided at http://www.ndsn.org/links.html

June 25, 2007 reply from Bill Dent [billdent@tx.rr.com]

Bob—

I don’t know about other states, but the Texas State Board of Public Accountancy acknowledges the problem as evidenced by the following link on their website:

http://www.tsbpa.state.tx.us/pi8.htm 

Bill Dent

WILLIAM C. DENT, CPA (Retired)

Indirectly this relates to the current accounting doctoral program controversies described at http://www.trinity.edu/rjensen//theory/00overview/theory01.htm#DoctoralPrograms

It also relates to the issues of whether it is best to spoon feed students --- http://www.trinity.edu/rjensen/265wp.htm

June 19, 2007 reply from J. S. Gangolly [gangolly@CSC.ALBANY.EDU]

Bob,

In some ways, the situation in accounting is similar to that in law. In others, there is substantial difference.

In law there are essentially two tiers in law schools: those that are quite bar exam oriented, and those that emphasize legal theory and philosophy. The kinds of placements they have are also very different. The students at second sort of schools do clerkships with well known or almost-well known judges, while those at the first sort of schools do not. The students at the second sort of schools get hired by the large well known law firms (for example, on the Wall Street) doing structured finance and M&A work, whereas the first kind often may do work that could be considered menial (uncontested divorces, fixing speeding tickets/DUI, etc.). Of course there are crossovers.

Often, students at the second sort of schools do not practice at all, but have a profound impact on the profession, and there are some who practice only occasionally (Tribe, Dershowitz,...).

I agree with Ann Althouse that the second sort of schools teach students to think like lawyers whereas the first kind teach them to be lawyers.

In accounting, on the other hand, I think we have only one kind of schools (the equivalent of second sort have no professional accounting programs), and they teach students to BE accountants rather) than to think like accountants.

This situation is convenient for many. It is much easier to teach one to be like someone than to teach one to think like some one.

Jagdish

June 23, 2007 reply from J. S. Gangolly [gangolly@CSC.ALBANY.EDU]

Dan,

I am not familiar with the Sheldon/Krieger studies, but will read them soon.

However, I interact with law school faculty often, and ask them questions just to find out how we in accounting can learn from them. I also have an abiding interest in the relationship between jurisprudence and accounting, and it is one of the few psychic benefits I have enjoyed being an accounting academic.

The law school market is pretty much a differentiated market. I think the missions of the top tier schools and others are very different, and both conform to their missions well; there are no pretensions as we have among the accounting schools where there is a race to reach the greasy pole no matter what one's comparative advantages are.

It is difficult to find students from non-top schools doing clerkships with supreme court justices, or the top law firms recruiting from such schools.

* The top tier schools emphasise law as an interdisciplinary field rather than a field confined to narrowly defined learning of existing laws.

* The top tier schools emphasise more critical analyses of certain aspects of law such as constitutional law, international law, jurisprudence... and de-emphasise other aspects such as administrative law, criminal procedure,... as the other schools do.

* Many students graduating from top schools do not enter law practice, and even when they do, they enter very different practices where critical thinking, interdisciplinary, and liberal arts type skills predominate. Many enter government and public service. Many also enter the academia. Over my career I have had dozens of friends and colleagues who went to top law schools (Harvard, Stanford, Cambridge, ...), and they have established their presence as scholars even outside their narrow domain. On the other hand, most law academics that I have known from non-top schools, on the other hand, have been in areas such as tax law, business law,..., generally not considerer the intellectual centers of gravity of law.

I do not mean to be an elitist when I make the above observations. In fact, one of my heroes in law, the late Don Berman, a Harvard educated lawyer at Northeastern, specialised in tax law. If I dig deep, I am sure I can find some law academics from non-top schools who were brilliant scholars in areas of law that are considered scholarly. The point I make is that the two types of schools are just different.

About a dozen years ago, I was trying to establish relationships with a local (non-top) law school to introduce our students in accounting to topics such as the relationship between constitutional law and accounting, and the role of jurisprudence in accounting. I got no where, and we were in fact on different wavelengths. On the other hand, more recently we did try to establish relationships for tax students and it has worked out very well. Our graduate tax students take some tax courses at the law school and it has helped them tremendously.

I attend law sort of conferences (usually at the intersection of law and computer science), and almost all participants are from the top tier law schools. Some from other law schools too attend, but usually to meet CPE requirements to keep their licenses current. I also am an avid reader of law literature (specially in constitutional law and jurisprudence) and there too just about every author is from a top tier law school.

There is nothing wrong in this dichotomy. Those from non-top law schools have performed brilliantly in the corporate world, and once in a while they do spectacular jobs for their clients (see OJ Simpson's dream team)Sometimes they also excel as legal scholars

Another difference I find between the alums at the two types of schools is that the contribution to legal literature from the top law schools is disproportionately large. Ronald Dworkin, Lawrence Tribe, and Richard Posner in the US, or Joseph Raz and HLA Hart in Britain,... one has to stretch one's imagination to come up with those from non-top tier law schools who come close.

And there is no cartel in law as we have in accounting. Good scholarship gets recognised no matter where it originates, and gatekeepers are generally powerless; quite unlike in accounting.

There is learning at both kinds of schools, they are just different. Trying to compare them is like comparing apples and oranges, or worse, like comparing apple to an ape.

I'll try to collect my thoughts on what we in accounting can learn from legal education at both levels and post them to AECM one of these days.

Regards,

Jagdish

Why accountancy doctoral programs are drying up and
why accountancy is no longer required for admission or
graduation in an accountancy doctoral program

• New Math (Tom Lehrer)--- http://www.youtube.com/watch?v=a81YvrV7Vv8
   

• Mathematics for Accounting Research (Tom Lehrer) ---
  http://www.youtube.com/watch?v=gfZWyUXn3So
  (Watch until you are at or near the end of the video since it sort of has a false ending.)

The American Accounting Association (AAA) has a new research report on the future supply and demand for accounting faculty. There's a whole lot of depressing colored graphics and white-knuckle handwringing about anticipated shortages of new doctoral graduates and faculty aging, but there's no solution offered --- http://aaahq.org/temp/phd/AccountingFacultyUSCollegesUniv.pdf 

April 2, 2008 message from David Fordham, James Madison University [fordhadr@JMU.EDU]

I've been reading the AAA study on accounting faculty status and trends:

http://aaahq.org/temp/phd/AccountingFacultyUSCollegesUniv.pdf and I have to wonder, will anything be done -- other than the continued hand wringing?

My guess: probably not. I've concluded no one is listening.

It seems to me that the long-term answer (more Ph.D. students and expanded Ph.D. programs) will of necessity exacerbate the short term crisis: shortage of experienced faculty teaching accounting majors. If more of the experienced professors teach Ph.D. students, that means even fewer teaching the undergrad accounting majors.

Of course, deans will point out that having more Ph.D. students means more grad students will be available to teach accounting majors. So more and more accounting classes will be taught by grad students rather than experienced professors. Is this a good thing? My guess: probably not.

And to be more cynical, does it really MATTER whether or not it's a good thing? My guess: ... probably not.

Having raised four children during the era of Winnie-the-Pooh, I can't help but see a parallel here with a character named Eeyore. Poor ol' Eeyore.

I guess you could say we are living in interesting times. *sigh*

The study is worth perusing. (Are our hands sore yet?)

David Fordham
James Madison University

April 3, 2008 reply from Bob Jensen

Hi David,

I suspect that the most popular solution in the future to meet the shortage of doctoral accounting faculty will be an explosion in the use of adjunct accounting faculty at highly varying ranges of compensation. This will bring us full circle back to the late 1950s when the scathing Pierson Carnegie Report [1959] and the Gordon and Howell Ford Foundation Report [1959] reports dramatically changed accounting doctoral education in the United States --- http://www.trinity.edu/rjensen/395wpTAR/Web/TAR395wp.htm

There are several remedies to relieve future shortages of accounting faculty to meet expected continued growth of accounting majors in undergraduate and masters programs (most states virtually require a fifth year of advanced study to sit for the CPA examination):

1. Make it more attractive for aging accounting faculty who are doing a great job with students to continued beyond retirement age. This is not a ideal solution in that it possibly blocks the flow of "fresh blood" and revitalization into accounting departments, but it is more affordable than paying over $200,000 in salary and fringe benefits for a new accounting doctoral graduate. Even at higher salaries there are just not enough new doctoral graduates (less than a hundred per year) to spread around among a thousand or more colleges. One way to make it more attractive is to assign aging faculty who want to live elsewhere (on the beach?)  and teach some distance education courses an opportunity to do so.
    
2. Make increasing use of good accounting teachers without doctorates to teach full time. Most will be assigned adjunct status, but some colleges may even let them be on a tenure track depending on the uniqueness of their credentials. This is generally a mixed bag for students, because adjunct professors are often poorly paid and forced to moonlight for sometimes more than they are paid from the colleges. Students generally benefit more from full-time teachers. It is also a poor solution in that adjunct faculty are generally second-class employees on a college campus.
    
3. Lure increasing numbers of accounting faculty with doctorates who are now teaching in foreign countries. One problem is that in these countries their doctoral degrees often are not in accountancy (many foreign countries do not even have accounting doctoral programs). In addition there are problems with luring families to leave their home countries. Plus there are the same problems as those noted below for many foreign student graduates of U.S. accounting doctoral programs.
    
4. Shorten North American accounting doctoral programs by making them something other than accountics (econometrics, psychometrics, and advanced mathematics) wolves in sheep clothing. Virtually all accounting doctoral programs now take nearly five years beyond a masters degree in large part because candidates with accounting backgrounds must take years of accountics courses or candidates with mathematics, econometrics, and psychometrics backgrounds must take years of undergraduate accounting equivalents.
   
   The essential problem is social science research methodology is now the only acceptable research methodology in North American accounting doctoral programs. This is an increasingly negative incentive for younger practicing accountants to consider entering accounting doctoral programs. Increasingly the applicants to these programs, especially at our most prestigious universities, are foreign mathematicians who know virtually nothing about accountancy but are seeking the salary, prestige, and citizenship of accounting professors in North America.
   
   The problem here is that our undergraduate and graduate students often benefit more from taking accounting courses from instructors who have rich backgrounds in five years of accounting courses and some years of accounting practice. Foreign graduates of accounting doctoral programs are often assigned AIS and doctoral research courses to teach since they have such limited backgrounds in financial, tax, auditing, and managerial accounting. There are of course noted exceptions and some of these immigrant professors have become great accounting educators and friends in the United States. But finding tax and auditing accounting doctoral graduates is particularly problematic.

   To meet the demand of thousands of colleges seeking accounting faculty, the supply situation is revealed by Plumlee et al (2006) as quoted at http://www.trinity.edu/rjensen/395wpTAR/Web/TAR395wp.htm

   There were only 29 doctoral students in auditing and 23 in tax out of the 2004 total of 391 accounting doctoral students enrolled in years 1-5 in the United States.

I suspect that the most popular solution in the future to meet the shortage of doctoral accounting faculty will be an explosion in the use of adjunct accounting faculty at highly varying ranges of compensation. This will bring us full circle back to the late 1950s when the scathing Pierson Carnegie Report [1959] and the Gordon and Howell Ford Foundation Report [1959] reports dramatically changed accounting doctoral education in the United States --- http://www.trinity.edu/rjensen/395wpTAR/Web/TAR395wp.htm
 

You can find out more about the problems with accounting doctoral programs at http://www.trinity.edu/rjensen/Theory01.htm#DoctoralPrograms

Bob Jensen

April 2, 2008 reply from Paul Williams [Paul_Williams@NCSU.EDU]

David,
Eeyore analogy was spot on. Oh woe, Oh woe. For many reasons, most of which have been touched upon or beaten to death on this listserv, we have brought this on ourselves. Frankly, I took the report to be wonderful news! As one of those folks over 41 (well over 41), I am becoming more valuable to NC State all of the time. I make less than a new hire and I have so (so, so, so) much more institutional knowledge and experience. I won't have to retire until I can't remember how to find my classroom and there will be no real incentive for the institution to want to get rid of me until then. I suspect that many of those Plumlee predicts will retire, won't. Some of the supply problem will be taken up by faculty working well past the retirement age.

Follow-up message from Paul on April 2, 2008

I was being somewhat facetious with my "delighted because they won't be in a hurry to rush me out the door" comment. I think your observations are correct. We must ask ourselves how it is that attracting students into PhD programs where the pay prospects are considerably lower is easier than in accounting. I am not surprised that bright, imaginative, bold people aren't attracted to doctoral work in accounting -- it is so mind-numbingly boring. It is all about technique, nothing about ideas. You and I are testimony to what was typical of the generation of accounting academics to which we belong. In my doctoral program, few of the students were undergraduate accounting majors. In my program we had people with degrees in engineering, forestry, sociology, education, and history. Now every candidate we interview from a U.S. doctoral program has the same profile: undergraduate accounting major, MAC, a few years of practice experience (perhaps to manager level), then the standardized, universal doctoral education in "applied" (whatever that could be is a mystery) economics. Based on my experience with undergraduate accounting curricula, a B.S. in accounting is about the worst preparation one could have for pursuing a Doctor of Philosophy degree. Supplication to authority seems to be the thread that runs through every accounting course. FASB (ooo!, GASBs (ooo!), SASs (ooo!), PCAOB (ooo!), SEC (ooo!) , BIG 4 (ooo!). I would like to teach a course (which I am not allowed to do) where we take the GAAP hierarchy and every acronym that students are taught to be reverential toward and teach them to be heretics -- a Dead Poets' Society for accounting students. There is nothing sacred about "official pronouncements" and even less sacred are the unexamined presumptions that underlay them. Even at the highest level of education, the PhD. level, accounting has become, in Bourdieu's term, a doxic society, which is anethema to scholarship.

April 2, 2008 reply from J. S. Gangolly [gangolly@CSC.ALBANY.EDU]

David and Paul,

I found the study very depressing.

First, it tells us that we are a geriatric profession. Lack of new blood will have disastrous consequences.

Second, the study keeps harping on the shortage of PhDs IN ACCOUNTING. This shortage is contrived. If four years of college and four or five more years of graduate school is all it takes, the way accounting is currently taught generally, a PhD IN ACCOUNTING is irrelevant. AACSB, in my opinion, is ruining what is essentially a professional field by forcing it with trappings of academic respectability.

If accounting is to succeed as an academic field, I would strongly suggest that we get rid of this ridiculous idea that a PhD IN ACCOUNTING is a requirement for college teaching. If AACSB can not relax the requirement by allowing qualified practitioners to teach accounting, it should relax the requirement of PhD in accounting.

There is no reason why a PhD in Economics, Computing, Psychology, Sociology, Engineering, or even classics can not teach accounting with some minimal retooling.

Third, salary inversion is a consequence of foolish policies having to do with the second point (above).

Fourth, inspite of monstrous salary differentials, we are unable to attract doctoral students. It is pathetic that fields with virtually negligible job markets such as anthropology and classics can attract good talent while we are languishing is a sign that our field is intellectually stagnating and unattractive to the bright minds.

Fifth, the exaggerated salaries offered to new entrants may be getting us the wrong type of people; the type of people attracted to money rather than intellectual excitement. As department chair, I have been put in the ridiculous position of recommending a ghigher starting pay to an ABD than we pay to Guggenheim, McArthur, Fulbright fellows, and NSF Young Investigator award winners with publications that our candidates will not equal in several lifetimes.

We have an unsustainable business model for academic accounting. The earlier the universities realise this the better for the education of accountants. But that will not happen; we have a moral hazard problem.

Being a member of the well-over-the-40-hill gang and having been sidelined as one doing off-the-wall non-mainstream research most of my academic life, the work I do outside of mainstream accounting sustains me. The "mainstream" academic accounting "tent" has gotten considerably smaller since I became an accountant late in life, and I found myself an outsider almost right from the beginning. What has been "mainstream" in academic accounting for the past over thirty years was then the proverbial camel sticking its nose into the tent. The people who have been pushed out of the tent are the professionals and the non-mainstream researchers.

This should not be the case. It is not the case with other fields in which I work.

Jagdish

"Research on Accounting Should Learn From the Past," by Michael H. Granof and Stephen A. Zeff, Chronicle of Higher Education, March 21, 2008

Starting in the 1960s, academic research on accounting became methodologically supercharged — far more quantitative and analytical than in previous decades. The results, however, have been paradoxical. The new paradigms have greatly increased our understanding of how financial information affects the decisions of investors as well as managers. At the same time, those models have crowded out other forms of investigation. The result is that professors of accounting have contributed little to the establishment of new practices and standards, have failed to perform a needed role as a watchdog of the profession, and have created a disconnect between their teaching and their research.

Before the 1960s, accounting research was primarily descriptive. Researchers described existing standards and practices and suggested ways in which they could be improved. Their findings were taken seriously by standard-setting boards, CPA's, and corporate officers.

A confluence of developments in the 1960s markedly changed the nature of research — and, as a consequence, its impact on practice. First, computers emerged as a means of collecting and analyzing vast amounts of information, especially stock prices and data drawn from corporate financial statements. Second, academic accountants themselves recognized the limitations of their methodologies. Argument, they realized, was no substitute for empirical evidence. Third, owing to criticism that their research was decidedly second rate because it was insufficiently analytical, business faculties sought academic respectability by employing the methods of disciplines like econometrics, psychology, statistics, and mathematics.

In response to those developments, professors of accounting not only established new journals that were restricted to metric-based research, but they limited existing academic publications to that type of inquiry. The most influential of the new journals was the Journal of Accounting Research, first published in 1963 and sponsored by the University of Chicago Graduate School of Business.

Acknowledging the primacy of the journals, business-school chairmen and deans increasingly confined the rewards of publication exclusively to those publications' contributors. That policy was applied initially at the business schools at private colleges that had the strongest M.B.A. programs. Then ambitious business schools at public institutions followed the lead of the private schools, even when the public schools had strong undergraduate and master's programs in accounting with successful traditions of practice-oriented research.

The unintended consequence has been that interesting and researchable questions in accounting are essentially being ignored. By confining the major thrust in research to phenomena that can be mathematically modeled or derived from electronic databases, academic accountants have failed to advance the profession in ways that are expected of them and of which they are capable.

Academic research has unquestionably broadened the views of standards setters as to the role of accounting information and how it affects the decisions of individual investors as well as the capital markets. Nevertheless, it has had scant influence on the standards themselves.

The research is hamstrung by restrictive and sometimes artificial assumptions. For example, researchers may construct mathematical models of optimum compensation contracts between an owner and a manager. But contrary to all that we know about human behavior, the models typically posit each of the parties to the arrangement as a "rational" economic being — one devoid of motivations other than to maximize pecuniary returns.

Moreover, research is limited to the homogenized content of electronic databases, which tell us, for example, the prices at which shares were traded but give no insight into the decision processes of either the buyers or the sellers. The research is thus unable to capture the essence of the human behavior that is of interest to accountants and standard setters.

Further, accounting researchers usually look backward rather than forward. They examine the impact of a standard only after it has been issued. And once a rule-making authority issues a standard, that authority seldom modifies it. Accounting is probably the only profession in which academic journals will publish empirical studies only if they have statistical validity. Medical journals, for example, routinely report on promising new procedures that have not yet withstood rigorous statistical scrutiny.

Floyd Norris, the chief financial correspondent of The New York Times, titled a 2006 speech to the American Accounting Association "Where Is the Next Abe Briloff?" Abe Briloff is a rare academic accountant. He has devoted his career to examining the financial statements of publicly traded companies and censuring firms that he believes have engaged in abusive accounting practices. Most of his work has been published in Barron's and in several books — almost none in academic journals. An accounting gadfly in the mold of Ralph Nader, he has criticized existing accounting practices in a way that has not only embarrassed the miscreants but has caused the rule-making authorities to issue new and more-rigorous standards. As Norris correctly suggested in his talk, if the academic community had produced more Abe Briloffs, there would have been fewer corporate accounting meltdowns.

The narrow focus of today's research has also resulted in a disconnect between research and teaching. Because of the difficulty of conducting publishable research in certain areas — such as taxation, managerial accounting, government accounting, and auditing — Ph.D. candidates avoid choosing them as specialties. Thus, even though those areas are central to any degree program in accounting, there is a shortage of faculty members sufficiently knowledgeable to teach them.

To be sure, some accounting research, particularly that pertaining to the efficiency of capital markets, has found its way into both the classroom and textbooks — but mainly in select M.B.A. programs and the textbooks used in those courses. There is little evidence that the research has had more than a marginal influence on what is taught in mainstream accounting courses.

What needs to be done? First, and most significantly, journal editors, department chairs, business-school deans, and promotion-and-tenure committees need to rethink the criteria for what constitutes appropriate accounting research. That is not to suggest that they should diminish the importance of the currently accepted modes or that they should lower their standards. But they need to expand the set of research methods to encompass those that, in other disciplines, are respected for their scientific standing. The methods include historical and field studies, policy analysis, surveys, and international comparisons when, as with empirical and analytical research, they otherwise meet the tests of sound scholarship.

Second, chairmen, deans, and promotion and merit-review committees must expand the criteria they use in assessing the research component of faculty performance. They must have the courage to establish criteria for what constitutes meritorious research that are consistent with their own institutions' unique characters and comparative advantages, rather than imitating the norms believed to be used in schools ranked higher in magazine and newspaper polls. In this regard, they must acknowledge that accounting departments, unlike other business disciplines such as finance and marketing, are associated with a well-defined and recognized profession. Accounting faculties, therefore, have a special obligation to conduct research that is of interest and relevance to the profession. The current accounting model was designed mainly for the industrial era, when property, plant, and equipment were companies' major assets. Today, intangibles such as brand values and intellectual capital are of overwhelming importance as assets, yet they are largely absent from company balance sheets. Academics must play a role in reforming the accounting model to fit the new postindustrial environment.

Third, Ph.D. programs must ensure that young accounting researchers are conversant with the fundamental issues that have arisen in the accounting discipline and with a broad range of research methodologies. The accounting literature did not begin in the second half of the 1960s. The books and articles written by accounting scholars from the 1920s through the 1960s can help to frame and put into perspective the questions that researchers are now studying.

For example, W.A. Paton and A.C. Littleton's 1940 monograph, An Introduction to Corporate Accounting Standards, profoundly shaped the debates of the day and greatly influenced how accounting was taught at universities. Today, however, many, if not most, accounting academics are ignorant of that literature. What they know of it is mainly from textbooks, which themselves evince little knowledge of the path-breaking work of earlier years. All of that leads to superficiality in teaching and to research without a connection to the past.

We fervently hope that the research pendulum will soon swing back from the narrow lines of inquiry that dominate today's leading journals to a rediscovery of the richness of what accounting research can be. For that to occur, deans and the current generation of academic accountants must give it a push.

Michael H. Granof is a professor of accounting at the McCombs School of Business at the University of Texas at Austin. Stephen A. Zeff is a professor of accounting at the Jesse H. Jones Graduate School of Management at Rice University.

March 18, 2008 reply from Paul Williams [Paul_Williams@NCSU.EDU]

Steve Zeff has been saying this since his stint as editor of The Accounting Review (TAR); nobody has listened. Zeff famously wrote at least two editorials published in TAR over 30 years ago that lamented the colonization of the accounting academy by the intellectually unwashed. He and Bill Cooper wrote a comment on Kinney's tutorial on how to do accounting research and it was rudely rejected by TAR. It gained a new life only when Tony Tinker published it as part of an issue of Critical Perspectives in Accounting devoted to the problem of dogma in accounting research.

It has only been since less subdued voices have been raised (outright rudeness has been the hallmark of those who transformed accounting into the empirical sub-discipline of a sub-discipline for which empirical work is irrelevant) that any movement has occurred. Judy Rayburn's diversity initiative and her invitation for Anthony Hopwood to give the Presidential address at the D.C. AAA meeting came only after many years of persistent unsubdued pointing out of things that were uncomfortable for the comfortable to confront.

Paul Williams
paul_williams@ncsu.edu 
(919)515-4436
 

Bob Jensen's threads on these matters are at the following links:

http://www.trinity.edu/rjensen/Theory01.htm#AcademicsVersusProfession

http://www.trinity.edu/rjensen/Theory01.htm#DoctoralPrograms

http://www.trinity.edu/rjensen/Theory01.htm#Replication

“An Analysis of the Evolution of Research Contributions by The Accounting Review: 1926-2005,” by Jean Heck and Robert E. Jensen, Accounting Historians Journal, Volume 34, No. 2, December 2007, pp. 109-142.

Praxiologies and the Philosophy of Economics, Edited by J. Lee Auspitz et al. --- Click Here

July 18, 2008 message from Roger Debreceny [roger@DEBRECENY.COM]

 

 American Accounting Association Membership Trends:

Year	Academic	Practitioner	Emeritus	Life	Associate	Total
1998	6,417	1,068	219	102	636	8,442
1999	6,473	965	207	94	610	8,349
2000	6,528	975	207	117	621	8,448
2001	6,643	972	217	130	594	8,556
2002	6,557	897	239	138	688	8,519
2003	6,373	810	238	146	750	8,317
2004	6,026	734	245	151	847	8,003
2005	6,019	676	209	235	918	8,057
2006	5,996	636	198	264	1,001	8,095
2007	5,859	605	213	277	1,155	8,109
10 Year change	-9%	-43%	-3%	172%	82%	-4%
Proportions in 1998	76%	13%	3%	1%	8%	100%
Proportions in 2007	72%	7%	3%	3%	14%	100%

 

 

 

 

 

 

 

 

 

 

This table (with the three summary rows I added) shows the 2007 report of AAA KPIs at aaahq.org/about/financials/KeyIndicators8_31_07.pdf .. there are some interesting patterns here. The number of practitioners has gone down by more than 40%. This has been a matter of concern for me for many years. The AAA should be the natural place a well trained, thoughtful accountant should go to for a professional experience that is different than that provided by the AICPA, IIA, ISACA etc. Yet we seem to be able to attract only 600 professional members – a statistical blip. I have spoken to several professionals who are involved with the AAA and  even they seem to think that attracting professionals is a lost cause. I don’t agree and I don’t think we should accept this number. Other similar organizations such as the AEA and ACM have a much higher proportion than we do.

New journals such as the Auditing sections new journal (which is already providing much fodder for my classes and my own professional improvement) is the way forward as is a much more targeted approach to marketing to professionals. I think that the AAA Annual Meeting is without parallel in terms of receiving an update on current events .. especially  if one went only to the panels and keynotes. And at a price that is just a fraction of equivalent events for professional organizations. This is something we should be marketing strongly.

The second interesting issue is the increase in proportion of associate members. This category is (I imagine) mostly students. The category has increased by more than 80% and nearly doubled its share to 14%. But I imagine that this hides considerable churn and losses. If it were not the case, the number of academic and practitioner members would have increased. What are we doing to actively convert Associate into Academic and Practitioner classes, I wonder?

Roger

 

July 18, 2008 reply from Bob Jensen

Thanks for the updates Tracey and Roger!

Not to detract from Tracey’s current optimism, the membership in the AAA has been on a steady decline for the past four decades (Craig Polhemus vs. Joel Demski)--- http://www.cs.trinity.edu/rjensen/001aaa/atlanta01.htm
The professionalism of Tracey and her staff have contributed greatly to preventing a membership disaster in recent years.

In my viewpoint, AAA membership decline is principally caused by the Perfect Storm that hit doctoral programs over the past five decades --- http://www.trinity.edu/rjensen/395wpTAR/Web/TAR395wp.htm

We lost over 90% of our practitioner AAA members in the past five decades from a high point where there were more practitioner members in the AAA than academic members. Practitioners that remain today are mostly PR and recruiting specialists from the large firms. I don’t think you will find them sitting in our concurrent sessions at the annual meetings of the AAA. At the same time, however, the large firms have greatly increased their financial support of the AAA and, even more importantly, the private support of our accountancy programs in colleges and universities throughout the world. As far as the AAA is concerned, however, the increased financial support from practitioner donations to the AAA is offset somewhat by the loss of the dues being paid by almost 6,000 practitioners who abandoned the AAA ship.

 

FIGURE 2

Non-Academic Authorship in TAR

 

 

What is really sad is the decline in academic members at a time when accounting professors were becoming the highest paid professors on nearly every college campus that has an accounting education program. The reason quite simply is the decline in enrollments in accounting doctoral programs as they became solely focused on producing accountics social scientists --- http://www.trinity.edu/rjensen/theory01.htm#DoctoralPrograms

 

FIGURE 3

Numbers of Doctoral Degrees from 2000-2004

 

But the saddest statistic is the longer run decline in the number of accounting doctoral program graduates in the United States. In 1988 there were over 200 graduates from U.S. doctoral programs in accounting. In two decades this is down by over 50%.

Doesn’t anybody else see a correlation between the decline in practitioner membership in the AAA with the decline in accounting doctoral program graduation rates? The overwhelming majority of applicants in history have been drawn from the practicing world of accountants, particularly practitioners from CPA firms. There is a tremendous and growing pool of applicants who have been working as practitioners from 1-5 years. Many would love to become accounting professors but are totally turned off by our social science accounting doctoral programs. They love accounting and hate accountics! They also hate to spend five years of their lives earning a PhD in accounting.

Our accounting doctoral programs were hijacked by mathematicians, economists, and psychologists in search of higher pay in accounting departments.

 Bob Jensen

Question
How long does it take to get an accounting doctorate?

Answer
The answer varies with respect to how long it takes to get both the undergraduate degree plus the requisite masters degree (or at least 150 credits required in most states). Assuming the student is full time and on track as an accounting major this makes it about 5.5 years before entering a doctoral program, although some masters programs only require one year for the masters degree for undergraduate accounting majors. To that we must add about four years of doctoral studies. This adds up to 9.5 years of full time study in college give or take a year. To this we must add the typical 1-5 years of experience most doctoral students spend in practice between attainment of a masters degree and eventual matriculation into a doctoral program.

The good news is that, unlike masters of accountancy and MBA programs, virtually all accountancy doctoral programs provide free tuition and rather generous living allowances from start to finish, although some of the time doctoral students must work as teaching and/or research assistants. Often fellowships in the fourth year allow students to devote full time to finishing their doctoral thesis.

Accountancy doctoral programs take at least four years in most cases for former accounting majors because entering students typically must take advanced mathematics, statistics, econometrics, and psychometrics prerequisites for doctoral seminars in accounting --- http://www.trinity.edu/rjensen/Theory01.htm#DoctoralPrograms

Update on the AACSB's Bridge Program for Wannabe Accounting Professors
I'm sure glad the American Medical Association does not have a bridging program where accounting PhDs can become medical doctors by taking only four courses in medicine.

Students who get doctorates in fields other than accounting can typically get a doctoral degree in less than 9.5 years of full-time college. For example, an economics PhD can realistically spend only 7.5 years in college. He or she can then enter a bridge program to become a business, finance, or even an accounting professor under the AACSB's new Bridge Program, but that program may take two or more years part time. There just does not appear to be a short track into accounting tenure track positions. But the added years may be worth it since accounting faculty salaries are extremely high relative to most other academic disciplines. The high salaries, in part, are do to the enormous shortage of accounting doctoral graduates relative to the number of tenure-track openings in major colleges and universities --- http://www.trinity.edu/rjensen/Theory01.htm#DoctoralPrograms

Only four United States Universities currently participate in the AACSB's Bridge program and one European business school whose doctoral programs I have doubts about because of truly absurd faculty-to-student ratios in the doctoral program.

The AACSB's domestic alternatives are as follows http://snipurl.com/aacsbbridge  
Also see http://snipurl.com/aacsbbridge2

• The University of Florida (USA)

• Tulane University (USA)

• Virginia Polytechnic Institute and State University (USA).

• University of Toledo (USA).

When I mentioned the Bridge Program last year on the AECM, Virginia Tech responded by saying they were participating but not for accounting bridges.

The University of Toledo does not offer accounting bridges --- http://www.utoledo.edu/business/aacsbbridge/curriculum.html

Tulane only lists one full professor of accounting in my Hasselback Directory such that I doubt that Tulane is a major player in an accounting Bridge Program (Tulane may be more viable in management, marketing, and finance).

The University of Florida does apparently have an accounting bridge --- http://www.cba.ufl.edu/academics/pdbp/
But this strangely does not appear to be affiliated with the well known Fisher School of Accountancy at the University of Florida.

From what I can tell, Florida is bridging with only four courses. Can four courses alone turn an economics or history professor into an accounting professor?
The Bridge Program says yes! I think the Bridge Program has little to do with it, although a person's prior background such as years of professional work as a CPA may make all the difference in the world along with the type of doctoral degree earned outside accounting.

June 20 message from Saeed Roohani [sroohani@COX.NET]

AACSB Announces May 2008 Bridge Program Graduates, there are many AACSB certified PQ accounting faculty for hire, see

visit AACSB's online database

 Saeed Roohani
Bryant University

June 20, 2008 reply from Bob Jensen

There is a surprisingly high proportion of the 78 candidates who want to teach accounting and auditing given than most of the bridge programs like Virginia Tech opted out of teaching accounting but do bridge business and finance studies. However, 20 bridged candidates who want to teach accounting and auditing will not make a big dent in the market where the number of accounting faculty openings exceeds the new doctoral graduate supply (less than 100 graduates) by over 1,000 openings.

The big question now is whether those bridged candidates can get tenure track positions and make tenure with sufficient research publications in accounting. The leading schools willingly hire adjunct, non-tenure-track, accounting instructors, but they’re pretty snooty when it comes to tenure tracks.

In my opinion the bridge program is absurd. Can four-courses in a typical bridge program is tantamount to a “90-day Wonder Program” for college graduates to become military officers --- http://en.wiktionary.org/wiki/90-day_wonder

There were great military officers that emerged from the 90-Day Wonder officers' candidate programs. There will also be great accounting, finance, and business professors that emerge from the AACSB bridging program. However, the programs do not deserve much of the credit, since the criteria for success are the credentials and personal qualities of the persons who entered the program. In accounting there's almost no chance of success unless the candidate was a good accountant before entering the bridge program. There's just too much to accounting that cannot be covered in less than about three years of full-time study in accountancy modules alone. In most states it takes five years of college as an accounting major just to sit for the CPA examination.

I'm sure glad the American Medical Association does not have a bridging program where accounting PhDs can become medical doctors by taking only four courses in medicine.

Bob Jensen

"Exploring Ways to Shorten the Ascent to a Ph.D.," by Joseph Berger, The New York Times, October 3, 2007 --- http://www.nytimes.com/2007/10/03/education/03education.html

Many of us have known this scholar: The hair is well-streaked with gray, the chin has begun to sag, but still our tortured friend slaves away at a masterwork intended to change the course of civilization that everyone else just hopes will finally get a career under way.

We even have a name for this sometimes pitied species — the A.B.D. — All But Dissertation. But in academia these days, that person is less a subject of ridicule than of soul-searching about what can done to shorten the time, sometimes much of a lifetime, it takes for so many graduate students to, well, graduate. The Council of Graduate Schools, representing 480 universities in the United States and Canada, is halfway through a seven-year project to explore ways of speeding up the ordeal.

For those who attempt it, the doctoral dissertation can loom on the horizon like Everest, gleaming invitingly as a challenge but often turning into a masochistic exercise once the ascent is begun. The average student takes 8.2 years to get a Ph.D.; in education, that figure surpasses 13 years. Fifty percent of students drop out along the way, with dissertations the major stumbling block. At commencement, the typical doctoral holder is 33, an age when peers are well along in their professions, and 12 percent of graduates are saddled with more than $50,000 in debt.

These statistics, compiled by the National Science Foundation and other government agencies by studying the 43,354 doctoral recipients of 2005, were even worse a few years ago. Now, universities are setting stricter timelines and demanding that faculty advisers meet regularly with protégés. Most science programs allow students to submit three research papers rather than a single grand work. More universities find ways to ease financial burdens, providing better paid teaching assistantships as well as tuition waivers. And more universities are setting up writing groups so that students feel less alone cobbling together a thesis.

Fighting these trends, and stretching out the process, is the increased competition for jobs and research grants; in fields like English where faculty vacancies are scarce, students realize they must come up with original, significant topics. Nevertheless, education researchers like Barbara E. Lovitts, who has written a new book urging professors to clarify what they expect in dissertations; for example, to point out that professors “view the dissertation as a training exercise” and that students should stop trying for “a degree of perfection that’s unnecessary and unobtainable.”

There are probably few universities that nudge students out the door as rapidly as Princeton, where a humanities student now averages 6.4 years compared with 7.5 in 2003. That is largely because Princeton guarantees financial support for its 330 scholars for five years, including free tuition and stipends that range up to $30,000 a year. That means students need teach no more than two courses during their schooling and can focus on research.

“Princeton since the 1930s has felt that a Ph.D. should be an education, not a career, and has valued a tight program,” said William B. Russel, dean of the graduate school.

And students are grateful. “Every morning I wake up and remind myself the university is paying me to do nothing but write the dissertation,” said Kellam Conover, 26, a classicist who expects to complete his course of study in five years next May when he finishes his dissertation on bribery in Athens. “It’s a tremendous advantage compared to having to work during the day and complete the dissertation part time.”

But fewer than a dozen universities have endowments or sources of financing large enough to afford five-year packages. The rest require students to teach regularly. Compare Princetonians with Brian Gatten, 28, an English scholar at the University of Texas in Austin. He has either been teaching or assisting in two courses every semester for five years.

“Universities need us as cheap labor to teach their undergraduates, and frankly we need to be needed because there isn’t another way for us to fund our education,” he said.

That raises a question that state legislatures and trustees might ponder: Would it be more cost effective to provide financing to speed graduate students into careers rather than having them drag out their apprenticeships?

But money is not the only reason Princeton does well. It has developed a culture where professors keep after students. Students talk of frequent meetings with advisers, not a semiannual review. For example, Ning Wu, 30, a father of two, works in Dr. Russel’s chemical engineering lab and said Dr. Russel comes by every Friday to discuss Mr. Wu’s work on polymer films used in computer chips. He aims to get his Ph.D. next year, his fifth.

While Dr. Russel values “the critical thinking and independent digging students have to do, either in their mind for an original concept or in the archives,” others question the necessity of book-length works. Some universities have established what they call professional doctorates for students who plan careers more as practitioners than scholars. Since the 1970s, Yeshiva University has not only offered a Ph.D. in psychology but also a separate doctor of psychology degree, or Psy.D., for those more interested in clinical work than research; that program requires a more modest research paper.

OTHER institutions are reviving master’s degree programs for, say, aspiring scientists who plan careers in development of products rather than research.

Those who insist on dissertations are aware that they must reduce the loneliness that defeats so many scholars. Gregory Nicholson, completing his sixth and final year at Michigan State, was able to finish a 270-page dissertation on spatial environments in novels like Kerouac’s “On the Road” with relative efficiency because of a writing group where he thrashed out his work with other thesis writers.

Continued in article

 

Bob Jensen's threads on accountancy doctoral programs are at the following three links:

• http://www.trinity.edu/rjensen/Theory01.htm#AcademicsVersusProfession
   

• http://www.trinity.edu/rjensen/Theory01.htm#DoctoralPrograms
   

• http://www.trinity.edu/rjensen/395wpTAR/03MainDocumentMar2007.htm