December 2002

Will Enron Deter Students from Majoring in Accounting?

By Clement Chen, Keith T. Jones, and D. David McIntyre

Even before the Enron debacle hit the front page, the accounting profession was struggling with declining enrollments. The number of students enrolled in accounting programs declined by 25% between 1995 and 2000. Some attributed this decline to the lower starting salaries of accounting graduates as compared to other fields. Other experts, including Albrecht and Sack in their 2000 study, suggested that the prosperous economy of the late 1990s may have steered students toward “riskier” fields. More recently, the popular press has suggested that the attention and scrutiny generated by the Enron scandal is further causing students to shy away from majoring in accounting. The accounting profession, long respected for integrity and honesty, is presumed to be less appealing to students as a direct result of the recent negative publicity.

As part of a larger effort to examine factors affecting students’ choices of a major at three large public universities in the Southeast, a survey conducted in the spring of 2002 solicited the views of 928 students enrolled in accounting and other business courses on two items related to the Enron collapse:

• Whether the Enron collapse would affect future students’ choice of a major, and
• Whether the Enron collapse would affect their choice if they were choosing a major at the time of the survey.

Both questions were rated on a five-point scale, with 1 indicating strong disagreement and 5 indicating strong agreement with the statement.

The survey results are somewhat mixed. As seen in Exhibit 1, 336 respondents out of 928 (36%) indicated some disagreement that the Enron collapse will affect future students’ choice of a major; 29% were neutral. On a positive note, these results suggest that nearly 65% of the respondents do not think that the collapse will deter students from majoring in accounting. Conversely, 35% of students indicated at least some agreement that future students’ decisions will be negatively affected.

The results are less discouraging when one considers the students’ responses as to how much the collapse would affect their own decisions. Of the 928 respondents, 556 (60%) indicated disagreement that the well-publicized collapse would be a factor in their own decision process if they were making their choice today. Another 23% indicated no opinion either way. In other words, 83% of the respondents do not appear to believe that the Enron collapse would be a factor in their own decision if they were in the process of choosing a major.

Exhibit 2A shows the students’ responses by major for the first question in the survey; Exhibit 2B, the second. Exhibit 2A suggests that no group agrees that the Enron collapse will affect future students’ choice of a major (mean of 4 or higher). Statistical tests indicate no significant differences among the groups in their responses. Information systems, one of the smallest groups, had the highest mean, at 3.2. Accounting majors provided a mean response of only 3.1. Of the 219 accounting majors responding, 33% indicated some level of disagreement that the collapse will have a negative effect, and another 24% indicated no strong feelings either way.

Consistent with the overall results, Exhibit 2B shows that none of the groups believe that the collapse would affect their own decision-making process. Information systems majors again showed the highest mean response, 2.8. Given that the accounting profession is receiving a large portion of the negative publicity, one might expect accounting majors to have some regrets about their choice as a result. However, 64% of accounting majors indicated that it would not affect their decision, while another 20% were neutral. Stated alternatively, a strong majority of accounting majors do not indicate that the Enron collapse alone would be a factor in their decision if they were choosing their major today. It is important to note that nearly one-third of the accounting majors were sophomores, and presumably able to change their major without an overwhelming burden.

Of course, students that have already chosen not to major in accounting likely would not be affected by Enron anyway. These results, however, suggest that the Enron collapse would not by itself deter them from entering the field. A strong majority in all of the other categories of majors do not indicate that the collapse would factor into their decision.

To be sure, the Enron debacle has hardly had a positive impact on the accounting profession, except for the possibility that some of the resulting changes will help to restore the long-term public perception of the accounting profession. Furthermore, it would perhaps be naïve to suggest that the profession will not lose some highly qualified candidates who would otherwise have chosen accounting as their field. The results of this current study, however, indicate that the situation may not be as grim as previously suggested.

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