Seeds of Innovation
in Accounting
Scholarship
Greg Waymire
AAA Annual Meeting
Denver, CO
Weds. August 10, 2011
Overview
1. The problem: Low innovation & stagnant
evolution in accounting scholarship.
2. How did things get to be this way?
3. How sticky is the problem?
4. What’s the cost & why should we care?
5. What can AAA (i.e., “we”) do?
• MAIN PROPOSITION
– Innovation in accounting scholarship is too limited with the
result being that our discipline is prone to conformist thinking
and intellectual indolence. In short, accounting scholarly
evolution is stagnant.
• SYMPTOMS
– Research is overly derivative.
– Too much careerism.
– Limited scholarly debate/discussion.
– Too much reliance on standard-setters’ “needs” for
research topics.
– We think we know more than we actually know.
The Challenge
Source: Hopwood, A. 2007. Whither Accounting Research? Accounting Review. (82: 5) 1367-1374.
EVOLUTIONARY CHANGE
• Evolution: Change in some population-wide
characteristic through time from ancestral
population to a descendant population
• Forces:
– Selection: Disappearance of units in the ancestral
population due to non-survival into the descendant
population.
– Transformation: Some units change their character
over time.
– Migration: New units present in descendant
population that were not in the ancestral population.
EVOLUTIONARY FORCES
Present Evolution of Accounting Scholarship
1.
2.
3.
Some ideas are disappearing, either because they are selected against or because they
transform to be more like the others (i.e., black to either gray or white).
One category is replicating itself at a high rate.
There is no migration into the population.
NET EFFECT: HOMOGENEITY IS A RECIPE FOR EXTINCTION!
How did things get to be this way?
• Increasing accounting faculty salaries led to contraction in the
number of assistant professor hires.
• Fewer assistant professors coupled with higher teaching
expectations from MBA rankings decreased resource allocations to
research and PhD education.
• In response, accounting groups focused their research emphasis to
sustain benefits from critical mass. The primary focus became
“financial archival” research to better align with finance, emphasis
of standard setters, and journals’ increasing focus.
• Quantified research quality assessment focused on citations and
publication frequency in “A” journals has led to research focused
more on “hot topics” and review articles rather than producing
insights about fundamental issues.
Escalating Accounting Faculty Salaries
A Simple Back-of-the-Envelope Calculation:
Year
Rookie Compensation
Nominal $
Real $
1985
$55,000
$55,000
2007
$200,000
$104,000
Declining Investment in New Assistant Prof Hires
Distribution of Ranks at Doctoral-Granting Accounting at Three
Points in Time: 1982, 1992, 2002
Assistants
Associates
Professors
Non-Tenure Track
TOTAL
1982
497 (33%)
357 (24%)
1992
501 (32%)
364 (23%)
2002
357 (24%)
390 (26%)
453 (30%)
201 (13%)
1508 (100%)
500 (31%)
224 (14%)
1589 (100%)
483 (32%)
260 (18%)
1490 (100%)
Table 3, Fogerty & Markarian (2007), “An Empirical Assessment of the Rise and Fall of
Accounting as an Academic Discipline,” Issues in Accounting Education.
Number of 1985 vs. 2008 Tenure Track Faculty at Big 10, Pac 10, SEC & Big 12
Schools
Decline in PhD Grads from 1990 to 2008
From Hasselback 2009 Directory of Accounting Faculty.
Increasing Focus on Financial Reporting Research
U.S. Dissertations by Topic: 1995 versus 2005
Year
1995
2005
Financial
Topics
69
76
%
(38%)
(70%)
Nonfinancial
Topics
113
32
%
(62%)
(30%)
Table 4, Tuttle & Dillard (2007), “Beyond Competition: Institutional Isomorphism
in U.S. Accounting Research,” Accounting Horizons.
Quantified Scholarly Productivity
Accounting &
Finance
Journal Rankings
Based on Impact
Factors
Quantified Scholarly Productivity
# References
Some Data on Reference per Article in TAR
April 1981
May 2011
5 articles averaging 17.8 pages
12 articles averaging 30.3 pages
19.4
49.8
Min
13
26
Max
28
78
Mean
CITATION INFLATION!!!!!
Quantified Scholarly Productivity
A Benchmark from Science Magazine
• Research Articles (up to ~4500 words, including references, notes
and captions, or ~5 printed pages) are expected to present a major
advance. Research Articles include…. about 40 references.
• Reports (up to ~2500 words including references, notes and
captions or ~3 printed pages) present important new research
results of broad significance. Reports should include…. about 30
references.
NOTE: The shortest article in May 2011 TAR (21 pages) had about
8,100 words exclusive of tables, figures, subheadings, and
references.
Limited Innovation in Accounting Scholarship
How Sticky is this Problem?
• Very sticky, at least in the short-run.
• Why?
– People are tooled to produce a given type of research.
Doctoral programs are geared towards producing more of
the same.
– Risk aversion among junior scholars is “rationally” high.
– Limited forums for debate, replication, and challenging the
status quo.
– Departments will continue to hire what doctoral programs
are turning out, which is geared increasingly to producing
incremental financial reporting research.
– Deans have strong financial incentive to hire non-tenure
track faculty.
Limited innovation is an opportunity cost
Example 1: Is accounting the language of business?
• Is this anything more than a glib throwaway line in our textbooks?
• If not, how is accounting a language?
– Function
– Form
– Mechanisms for evolution & adaptation
• Some encouraging signs – new work looking at the use of language
in corporate disclosure.
• Still, we are only beginning to scratch the surface on this issue, and
much more is needed.
Limited innovation is an opportunity cost
(cont.)
Example 2: Are we homo accounticus?
Neuronal Activation in the Ventral Tegmental Cortex Reported by Fiorillo et al. (2003)
Based on Single Cell Recording for Two Macaque Monkeys in Response to Probabilistic
Signals about Forthcoming Rewards
Stimulus
Sale Made
Reward
Cash Collected
Firing at actual receipt of reward when
probability low
Stimulus
Sale Made
Reward
Cash Collected
Firing at signal of future reward when
probability high
Limited innovation is an opportunity cost (cont.)?
Example 3: Why is accounting present at the emergence of complex
human civilizations?
Innovation in Accounting Scholarship
IS THIS POSSIBLE?
Heterogeneity via new ideas generated through transformation or reproduction
of different types.
The Aspiration
Source: Hopwood, A. 2007. Whither Accounting Research? Accounting Review. (82: 5) 1367-1374.
Can We Change Matters in the Long-Run?
Planting Seeds of Innovation with Excellence.
• 2011 AAA Strategic Retreat was focused on
encouraging innovation in accounting scholarship
• Several promising (preliminary) ideas surfaced at
the Strategic Retreat
• The Current Challenge: Continuing the
Conversation
– Publishing the output
– Conversation with broad membership online and at
meetings
– Concrete proposals directed at issues that resonate
with membership
AAA Strategic Retreat of May 2011: Focus
• Assertion: Accounting research as of 2011 is
stagnant and lacking in significant innovation that
introduces fresh ideas and insights into our
scholarly discipline.
• Question: Is this a correct statement? If not, why?
If so, what factors have led to this state of affairs,
what can be done to reverse it, and what role, if
any, should AAA play in this process?
Organization of AAA Strategic Retreat
• Who was involved?
– Four Speakers: Sudipta Basu (for Shyam Sunder),
Chris Chapman, Bill McCarthy, & Don Moser
– AAA Executive Committee & persons responsible
for organizing 2012 Annual Meeting, Doctoral
Consortium, and New Faculty Consortium
• Format
– Initial presentations by speakers followed by
breakouts where participants moved between
groups and tangible suggestions were put forth
Early Ideas from the Strategic Retreat in 7 Areas
Scholarly Retreats: (1) experienced faculty
akin to doctoral consortium, (2) scholars
and practitioners, or (3) organized around
innovative questions posed by AAA
members.
AAA White Paper/Monograph: Define
challenges in improving scholarly
innovation and means for improvement.
Doctoral Education: (1) archive of AAA
presentations on different methods and
approaches, (2) data repository about PhD
programs, & (3) awards for doctoral
education excellence
Journals: (1) Leverage potential for online
content, (2) TAR section on research
innovation, (3) sessions on how to be a
good reviewer at doctoral & new faculty
Consortia
Big issues Initiative: once every two-three
years identify a big issue, put money into
prizes that would then be awarded 2 or 3
years hence.
Building Historical Awareness: Vehicles to
showcase the highest impact contributions
of accounting research published by AAA.
Best papers in TAR by decade back to
1920s.
Engagement with Practice: (1) Interactive
sessions at doctoral & new faculty
consortia. (2) Internships to facilitate
research within firms.
Where to Next?
Continuing the Conversation
• Putting Strategic Retreat output into the
public domain (posting presentations, writeups on SSRN, and journals)
• Establishing online venue in AAA Commons
for discussion and debate by AAA members
• Implementation for proposals that have
broad support from AAA members.