New Accounting Scholars—Does It Matter What We Teach Them?

INTRODUCTION This entry in Joel Demski's Curriculum Challenge is a proposal for an accounting concepts and issues-based design (ACI) for an accounting Ph.D. curriculum. The design is suggestive rather than definitive, and is intended to provide new accounting scholars a cost effective, long-term basis for a scholarly career, for their own research, and for teaching future accounting professionals, users, and regulators about the causes and consequences of accounting choice(s). Accounting choices are made by individual managers and standards setters' choices of accounting methods to be applied across firms and over time. Both types of choices have complex causes and consequences that affect the welfare of individuals and society. Accounting scholarship is the systematic search for and communication of knowledge about the causes and consequences of accounting choices. Accounting Ph.D. curriculum design is important because it affects the quality of accounting scholarship. The proposed ACI design assumes that new accounting scholars need a broad understanding of the concepts and issues underlying accounting choice(s) made by business managers and standard setters. They also need to understand concepts underlying research methods that can develop new knowledge about accounting choices. For research success, they need specialized knowledge about some current issues and expertise in particular research methods. Finally, new accounting scholars need efficient preparation. What is the basis of our present knowledge about accounting and how should we convey it to new accounting scholars? Let's think broadly about long-term objectives, how best to achieve them, and whether our present curricula can be considered optimal. In this article, I discuss the substantive environment in which accounting choice(s) take place and the necessity of a broad framework for understanding the choices. This is followed by an analysis of curricula today, a description of the proposed ACI curriculum design, and a brief summary and challenge for the professoriate. ACCOUNTING TODAY Accounting in the real world is the result of many choices. These choices are made at the individual level as management decides how it wishes to represent its transactions, events, and states; and at the social level as standards-setting and regulatory bodies decide which methods to mandate across firms and time. Accounting is used both pre-decision and post-decision by managements to run businesses better, by investors and analysts to value businesses, by regulators and directors to oversee businesses, and by trading partners and the government to settle contracts and tax payments. To understand accounting at the broadest level, we must understand the component factors and forces that influence the accounting choice(s) and their consequences. Accounting choice incorporates or imbeds concepts from (at least) the following: information economics; measurement theory; information technology; economics; finance; individual, group, and organizational behavior; industrial organization; ethical behavior and reputation; regulation; law (civil and criminal); and political economy. This is a long list and covers many disparate topics. Yet, all are needed to understand accounting today and to make predictions about its future. To illustrate some of these factors and the need for a broad approach to accounting scholarship, let's consider the role of accounting in corporate governance. Example: Accounting and Corporate Governance Corporate governance can be defined as the processes and procedures used by representatives of an entity's stockholders to provide oversight of management's administration of the resources entrusted to it by stockholders. Since 1978, the accounting process and financial reporting have been a formal part of corporate governance in the United States. The accounting process measures arm's-length transactions of management with workers, suppliers, customers, and lenders; and financial statements based on generally accepted accounting principles (GAAP) summarize the results. …