• Career Center

    What’s Getting a PhD in Accounting Really All About?

    By | August 14, 2013
    This is the first post from our new contributor, Dr. Emelee, a former Big 4 employee who is in process of obtaining his PhD.
    So you want to be a professor?  Teaching looks like it would be fun (it is), you see that some professors are only on campus two days a week (they are), and you’ve heard that professors get paid well (they do). What could possibly be the down side?
    When I started to consider the PhD, I decided the smart move would be to talk to current professors to see what I was getting myself into. The answers I got from them were cryptic, condescending, useless, or a mix of all three.
    They would say things like, “The PhD is really about research.” and not elaborate much. When I was lucky they would say something like, “The PhD is really about research.  It’s not about teaching,”  and, of course, not elaborate much. Amazing that people who get paid to explain things for a living can be so worthless at informing would-be newcomers what they’re getting into.
    Let me break down each of those statements for you based on what I now know, starting with…
    “The PhD is really about research.” — This statement looks simple enough. Here’s what it really means: A PhD in accounting has almost nothing to do with accounting. There are no journal entries. There are no T-accounts. There aren’t even any financial statements, applications of GAAP, figuring out how much it costs to manufacture something, or how much a corporation owes in taxes. The courses PhD students take look nothing at all like undergrad or masters accounting courses, and the skills you honed as a bachelor or masters student won’t help you much in an accounting PhD program. All the knowledge you need to actually teach accounting you picked up as an undergrad or master’s student. 
    It’s true that you do need to have some familiarity with how accounting works, but accounting specific knowledge usually takes a back seat. Weird, right? But don’t worry, I will discuss this in more detail in my next post.
    So what is research? Positivist research — the major paradigm in leading accounting academic journals these days — is stepping out from the single-company view of how to account for something and using the scientific method to look at how groups of individuals or how financial markets react to accounting choices or incentives or regulatory changes.
    So how do you do that?
    You do it with a mix of things that most people with bachelor’s degrees and master’s degrees in accounting really don’t have that much of- statistics, mathematics, economics, and econometrics.
    Statistics, mathematics, economics and what?? What was that last one?
    Econometrics. Think of it as statistics on steroids. Econometrics applies statistics to economic data which often violates the hell out of many of the distributional assumptions normal statistics are based on.  Sounds fun, right? You will also be spending plenty of time working with a statistical software package of some sort — PASW, SAS, MATLAB, R, or Stata. For one big branch of accounting research (archival), you will actually have to turn yourself into a good programmer capable of working with messy datasets.
    When the professor told you the PhD is about research, they should have said something like this:
    The PhD is based on research. Research is based on psychological or economic theory and statistics. Statistics are based on mathematics. You need to be comfortable taking two years of graduate level econometrics, statistics, and mathematics if you want to do a PhD in accounting. And by the way, I hope you have already taken Calculus I (and not the business school “calculus” that most undergrad degrees require. You need the calculus the engineering and physics undergrads take), Calculus II, Calculus III, and Linear Algebra because you will need to be good at all of those topics before you even step foot into a doctoral program. If you can learn to program and work with relational databases before you enroll in a PhD program, that will also help. Finally, research is more than just numbers and analysis. You need to be a good writer so that you can clearly communicate why the research you are doing is important, what you found, and why it matters.
    Having said all of that, the PhD is really about statistics, mathematics, economics, econometrics, psychology, programming, finance theory, reading tons of papers in academic journals, and oh yeah, writing. Pure accounting is the backdrop for all of this, but it’s often a second thought.
    • The Fraud Square

      This seems like it will be a very interesting series. These short series, like the one on the Partner Track view from a Sr. Manager, from guest contributors are a great idea.

      • End of B4??

        No compliments please. The inmates don’t respond to positive reinforcement well.

      • $56523509

        Speaking of which, when is Sidney Kingston going to provide us with the next installment of The Adventures of a Big 4 Kool-Aid Man?

        • Two Dice on Felt

          Oh yeah!

      • I Just love this

        Agreed

    • Guest

      Good article, but your professors must suck. All of my former professors who I see at trainings now and then are always pushing anyone who will listen towards academia and are always more than willing to sit down and take the time to explain the nuances and pros/cons.

      • Guest

        I sat down with one of my professors to discuss a PhD. His comments matched the author’s post, almost word for word. As a result, I chose not to pursue a PhD.

    • Robert Palmer

      Should be a good series.

    • AndTheMoney?

      The biggest question I have is how someone, after several years of raises and promotions, can go back to living off $20k – $30k of stipends a year for five years. If I could figure that problem out I’d totally go back to get my PhD.

      • $56523509

        Five years if you’re lucky.

        • Guest

          Two guys who worked for me got their PhD’s a couple of years ago – it took them 7 years! – how do you do that unless daddy is rich (the case with them) or you acquire a taste for dog food?

          • Pinkerton

            Most PhD students who come back to academia either a) have spouses who work so they don’t starve because of the stipend or b) are single and young. Individuals who leave Public to go into academia typically work 2 -3 years.

            $30k in a college town goes farther than you think!

            • Theonlyfratiminareforacademics

              At the bar… I guess the word “savings” comes into play.

      • Organic

        Easy – don’t get married, don’t have children, and for god sakes, don’t go out and lease a 3-series for 5 years based off of your first big-4 paycheck.

    • SouthernCPA

      My personal experience: the accounting professors I had that were PhD were by and large useless. The accounting instructors that I had that had a lot of accounting real-world experience, and were teaching on a master’s degree, were much better. The adjunct faculty, who were still working while teaching a class here or there, were the best.

      If that’s what you have to go through to get a PhD, now I see why I experienced the above. Those are skill sets that don’t fit well with many CPAs.

      I had thought about, for a few seconds, doing a PhD in accounting. But I’m not at all interested in doing all that research stuff. I’m not a scientist.
      I do remain interested in one day, teaching a class or two while I am still working.

      • GAAPforce1

        I absolutely concur,

        PhD’s have their place, but the adjunct professional professors add so much real world value to the learning experience.

        • B4TAX

          PhDs have their place alright, in the back of the soup kitchen line.

      • Guest

        By far and away my best “professors” were the adjuncts; took a banking seminar class in Fall’2008 from a guy who worked as a full time FDIC Auditor, most/all PhDs at my school had nothing on that guy in this area.

      • Agreed

        I can’t agree more. I had the pleasure of attending a small liberal arts school (D-1 btw) where three of the four professors in the department just had their Masters and CPA. They were great professors and I didn’t realize how good I had it until I went to a “Top 25 MAcc Program.” In this ‘top’ program,’ I had nine different professors, all with their PhD, and I can honestly say that only two of them could teach. You could tell they were all very smart but seven of them were just awful at teaching. I’m sure they cared more about research and that their teaching was just a means of achieving a platform to perform research. All that being said, if you want to teach and don’t care much about research, go to a smaller school with prestige and teach there. They’re not looking for research, just people who can actually teach and inspire.

      • Gust

        A – frigging – right. Best prof – grizzly old former AA partner (long before the troubles) , second career, maybe he had an MBA but for sure no PhD. He told us what it was like to do the work and what was important and treated us like decent people. Worst – the PhD candidate. Gasbag, no experience in the real world (and I was working in an effing restaurant to pay tuition and even I knew that).

        • Teughcats

          Wow, did you go to Michigan in the mid-80’s? Sounds very familiar!

      • ordinaryleastsquares

        Surprisingly enough I had the opposite experience in undergrad. The classes where I learned the most (by far) were from actual professors, as opposed to adjuncts or part-time. Then again, now that I think about the best professors I had were also those who were ex-Big 4 and had worked in public accounting for 3-5 years prior to getting their PhD. They were able to combine the practical, real-world part of accounting along with the underlying theory, which is more important than a lot of people would like to believe. Their classes were way tougher, but you ended coming away with a lot more. The adjuncts I had taught way too much “to the book” and really didn’t teach much of the underlying conceptual material.

        • Agreed

          My accounting professors without their PhD weren’t adjunct, they were full time and most were tenured or on their way to tenure. I never had an adjunct. All of my professors in grad school had Big 4 experience and then went back to school, but none of them could teach to earn a living.

    • cool story brah
    • $56523509

      Sounds like a bunch of bullshit.

      It was an interesting read though. I’ll look forward to the next one.

      • ProfAmy

        PHD: Piled high and deep!

    • Dirty Underwear

      Great article. Considered getting a PhD but never understood what they do.

    • Learned

      Are there any opportunities for teaching with just a masters?

      • I Just love this

        As adjuncts (contract part-time professors) or at a junior/community college. I also know a couple universities that waive their PhD requirement for the CPA, which tells me they aren’t as much of a research institution.

      • GAAPforce1

        Correct me if I’m wrong, but the traditional routes to teaching accounting are the Academic Qualification (PhD) and Professional Qualification (Master’s + CPA) routes.

        So to answer your question, I do not believe one can just teach accounting with a Master’s degree alone. Pair a Master degree with a CPA and one can teach through the PQ route.

    • I Just love this

      Hope this series covers the “Publish or Perish” crap professors have to go through in order to earn tenure.

    • Gust

      That’s a Bingo! Liked it a lot. More please.

    • ordinaryleastsquares

      How many years were between your undergrad/Master’s and starting the PhD (i.e., how many years did you stay in Big 4)? Who did you have write your LoRs (old professors, employer, etc)? I’ve been out for a little under 4 years, but I am targeting to apply for fall 2014, assuming I can get everything together in time.

    • billy

      Giving up on any type of productive life in the private sector. That’s what getting a PhD in accounting is all about.

    • B4TAX

      Given that phd’s are pretty much full of crap even in real academic subjects like physics, I highly doubt there is anything to be gained by having phd’s in fucking accounting (dude, take a hit of this…what is fair value anyway???).

    • Agreed

      Yeah, you take a pay hit of 30-50k for a few years, but if you go to a good school (top 25 accounting research institution) you could get paid upwards of $150,000 just starting as a professor. Don’t think that these guys have it easy either. They don’t sit back and relax for 150k. Most of them are probably working 60+ hours a week and if they aren’t they probably aren’t producing good research and may not get tenure

      • Pinkerton

        Most of us do consulting on the side and the salary you cite is for a 9 month contract. Most research universities are pretty good at providing summer funding for research or even smaller schools will pay professors extra for teaching summer classes. I know some professors help out with Becker’s Fast Pass courses.

        But, you need to enjoy the academic life for it to be worth it.

    • Two Dice on Felt

      Pretty much going to echo the comments already here – A) my best profs in school were those with fresh real-world experience and B) this article makes me want to go back for more schooling even less than I already did.

    • Recent CPA

      I agree with the sentiment that CPA + Realworld experience provides better teaching than a PhD. My best accounting prof at Adrian College was also the chair of the audit committee for a large (nonprofit) organization. He gave us an understanding of what it means to be a practicing CPA. It did not matter that he wasn’t a PhD. Very few accounting professors actually serve on audit committees of real companies the way he did. Props to Adrian College for seeing what matters most.

    • mfrancshems

      Not only should the Ph.D HAVE SOMETHING TO DO WITH ACCOUNTING, IT SHOULD REQUIRE A HIGHLY SPECIALIZED AND ADVANCE KNOWLEDGE OF CURRENT AND EMERGING ACCOUNTING ISSUES THAT ARE PREVALENT AS WELL AS DEVELOPING WITHIN THE ACCOUNTING INDUSTRY TODAY AND FOR IT’S FUTURE ….

      IT SHOULD HAVE A COMPREHENSIVE AND HIGHLY PROFICIENT EXPERTISE FOR THE EXPLANATION AND INTERPRETATION OF CODIFIED ACCOUNTING CONCEPTS AND PRINCIPLES TO PROMULGATE ITS PERCEPTIONS FOR THE POSTERITY OF THE INDUSTRY AND PROFESSION TO ANSWER SUCH QYESTIONS SUCH AS:

      WHY IS THERE ACCOUNTING AND HOW DOES THE INDUSTRY AND ACADEMIC PREPARATION MEET THIS CHALLEGE?

      HOW WILL ECONOMIC CHANGES AND SUSTAINABILITY CONCERNS AFFECT ACCOUNTING?

    • mfrancshems

      How will business and technological innovations affect the industry, the academic requirements and credentials for practice, and the knowledge or skills utilized to proficiently demonstrate these new capabilities?

      How does government affect the profession, its industry practices and guidelines, and its professional development for the future of all accountants including public accounting firms?

      How will new technologies, shared technologies, measurements and implementation of such technologies affect traditional or historical accounting?

      And if the industry is satisfied by modifying its positions due to legislative requirements, DOES ACCOUNTING HAVE A ROLE AND RESPONSIBILITY TO MEET THESE CHALLENGES DAILY OR EVEN PERIODICALLY WELL IN ADVANCE?

      THESE SEEM TO BE THE APPROPRIATE VENUE FOR ANY REAL ADVANCED ACCOUNTING STUDY AND ACADEMIC DISCIPLINE

    • mfrancshems

      How well do accountants and accounting firms and the industry itself perform ACCOUNTING AND CONDUCT THE REQUIREMENTS TO DEMONSTRATE ITS PROFICIENCY ….? That’s a question for INTERNAL AND MANAGEMENT ACCOUNTING although I have read where some public accounting firms are devoting adequate staffs and departments for THEIR OWN SELF-REGULATION AND INTEGRITY ….

      In any event, THE ACCOUNTANT PHD’S LEVEL OF EXPERTISE IS NOT BETTER SUITED FOR THOSE ECONOMETRICS BUT PERHAPS THE METRICS OF PRINCIPLE AND FASB PRONOUNCEMENT COMPLIANCE, UNDERSTANDING, AND INTERPRETATION …. TO TELL US WHO IS USING WHAT ACCOUNTING AND WHY OR HOW WELL

      IF ACCOUNTING PRECEPTS – the need for double-entry or even record keeping
      IF ACCOUNTING CONCEPTS – the need, requirement, and understanding of debits and credits, for example
      IF ACCOUNTING PRINCIPLES – how to measure and record transactions to be affected by THE 9 GENERAL PRINCIPLES OF GAAP
      IF CHANGES IN ACCOUNTING PRINCIPLE – new implementation and affects upon previous, current, and prospective transaction
      IF ERRORS AND CORRECTIONS – affecting prior years will be corrected for the previous, current, and prospective years
      IF FORENSIC ACCOUNTING – will require more or less alpha or beta risk and why

    • mfrancshems

      IF THESE …. ARE NOT SUFFICIENT FOR THE ADVANCED KNOWLEDGE, SKILL, AND EXPERTISE OF ACCOUNTING …. THEN WHAT WILL BE THE JURISDICTION ASIDE FROM FORMAL SETTING RULE OR GUIDELINE ENTITIES LIKE FASB, AICPA, NASBA, NIA, OR PCOAB …. ALL WHICH SHOULD BE HIGHLY STAFFED PROFESSIONALLY WITH THE PHD ACCOUNTANTS ….

      THE BLOG AND ARTICLE SEEMS TO REFER TO THE ACCOUNTING PHD AS IF IT WERE SUPPOSED TO BE THE ECONOMICS PHD WITH ITS NEED FOR STATISTICS AND ECONOMETRICS …. ADVANCED CALCULUS …. AND OTHER MATH COUSES BEST DEVISED FOR MEASUREMENT INSTEAD OF CALCULATIONS …. THAT IS …. CALCULATIONS OF DOLLAR AMOUNTS, TRANSACTION FIGURES, AND OTHER TAX-REPORTING SUMS OR BALANCES ….. DEPRECIATION, AMORTIZATION, NET PRESENT VALUES, CAPITAL BUDGETING, INTERNAL RATES OF RETURN, PAYBACK PERIODS, ACCOUNTING RATES OF RETURN, RETURN ON INVESTMENT, RESIDUAL INCOME, COMPREHENSIVE INCOME, INTERPRETATIONS OF SFAS …. STATEMENTS ON FINANCIAL ACCOUNTING STANDARDS FOR DERIVATIVE INSTRUMENTS …. DON’T REQUIRE CALCULUS OR ALGEBRA OR ECONOMETRICS ….

      SO MAYBE THE ACCOUNTING PHD IS FOR BANKING AND FINANCE ….
      BONDS TRADERS AND HIGH BONUS EARNING INVESTMENT BANKERS …. OR MAYBE FOR CENTRAL BANK PRESIDENTS …. OR THE FED CHAIRMAN ….

    • DocMike

      I was one of those CPAs who went back for a PhD in Accounting because I really wanted to teach. This first installment is right on target – a PhD in Accounting program is not about teaching, it’s about learning how to conduct research. After graduation, the choice is whether to go to a “research” school (big name national U) or to a “teaching” school. The research schools pay more and have significantly lighter teaching loads; they also require publication in “top tier” academic journals. The teaching schools pay less and have heavier teaching loads; however, their research requirements are (usually much) lighter.