Pursuing a PhD in Accounting:
What to Expect

By Thomas G. Noland, Bill Francisco, and Debra Sinclair

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PhD Shortage

The shortage of PhD-prepared professors in accounting has been exacerbated in recent years as older professors retire and fewer accounting professionals choose a career in academia. A 2005 study conducted by the American Accounting Association (AAA) and the Accounting Programs Leadership Group (APLG) estimated that, from 2005 to 2008, the overall supply of new accounting PhDs will meet only 49.9% of the demand. The study found that the supply of new PhDs specializing in audit and tax will meet only 22.8% and 27.1% needed in these disciplines, respectively.

The number of accounting doctorates granted nationwide has fallen over the last 15 years (Exhibit 1). In the late 1980s and early 1990s, approximately 200 PhDs were granted in accounting annually. Fewer than 100 PhDs were granted annually in the calendar years 2002 to 2004, with a low of 69 in 2003, according to the 2006–2007 Hasselback Accounting Faculty Directory. For the 2005–2006 academic year, the Association to Advance Collegiate Schools of Business (AACSB) International Salary Survey reported that only 53 new doctorates in accounting were hired. Another 14 professors who were “all but dissertation” (ABD) were also hired. Professors who are ABD have completed all coursework and required exams, but have not completed their dissertation. These professors are typically granted a one- or two-year grace period to complete their dissertation. The bottom line for potential PhD students is that, in the academic market, completing a PhD in accounting from an AACSB-accredited institution means that a job as an accounting professor is almost guarenteed.

Gaining Admission

One of the first things future academics learn when considering a doctorate is that not every school offers a PhD in accounting. According to the Hasselback Accounting Faculty Directory, only 73 universities in the United States have granted PhDs in accounting since 1999. Some schools that offer PhDs in other business disciplines, such as Duke and Georgia Tech, offer a PhD with an accounting concentration. Given that there are so few PhD programs in accounting and that acceptance into any program is not guaranteed, potential candidates may have to relocate to pursue their degree.

A question often asked by potential PhD students is, “What are the criteria to gain admission to a program?” While this varies from school to school, most PhD programs look at undergraduate and graduate transcripts, professional work experience, professional certifications (e.g., CPA, CMA, CFE, CIA), recommendation letters, and Graduate Management Admissions Test (GMAT) scores. The AAA/APLG study found that approximately 46% of current PhD students had between one and five years of work experience, while more than 38% had over five years of work experience. Surprisingly, the study found that only 56% of the current students held a professional certification.

Because grades are often difficult to compare between schools, the GMAT is often considered the gold standard when evaluating future PhD students. The authors conducted a survey of accounting PhD programs in 2005 and found that the median GMAT score for public universities was 685 (out of 800), whereas the median GMAT score for private universities was 730. Approximately 90% of the responding programs reported that the overall quality of their current PhD students was either the same or had improved over the last five years. Potential candidates should therefore prepare diligently for the GMAT.

While the number of new PhDs is down compared to the early 1990s, the authors found that over 80% of the respondents reported that their PhD enrollment over the last five years was either holding steady or increasing. The authors also found that the average accounting PhD program had nine students currently enrolled. The AAA/APLG study found that the average admissions rate per year for new PhD students was 2.59, ranging from one student to six students.

PhD Program Expectations

While the overall number of PhDs granted is down, universities expect approximately 82% of their current students to obtain their doctoral degree. PhD program directors reported several reasons for students not completing their degrees. One common response was that students often find that academic research is not what they expected. Another reason was that students are sometimes overwhelmed by the combination of coursework, research, and teaching expectations required of a PhD student. Most universities require their PhD students to teach one or two classes per semester or work as a research assistant in addition to their own coursework.

While the coursework varies among universities, a typical program will consist of PhD research seminars (three to five classes), additional graduate work in accounting (four to six classes), a minor field of study in another business discipline such as finance, information systems, or economics (three to five classes), and several courses in statistics and quantitative research (four to six classes).

After completing the coursework requirements, a student must pass a comprehensive examination in her area of study. Then the student begins the dissertation phase of the PhD program. The student will first develop and defend a dissertation proposal. Once the proposal is formally accepted by the dissertation committee, the student must complete the dissertation research and defend the dissertation.

The authors found that the average accounting PhD program took 4.8 years to complete: 2.5 years of coursework and 2.3 years to finish the dissertation. Ninety percent of the schools that responded to the survey required students to be in full-time residence prior to the dissertation phase of their degrees. Full-time residence means that a student must be registered for a full PhD course load and either teach or serve as a research assistant. While not normally recommended, some students leave their PhD program ABD, and take a job as an instructor or assistant professor at another university. Students who leave ABD often find it difficult to complete the dissertation while meeting the demands of a full-time faculty position.

Financial Support

One of the most common reasons given for why more professors do not pursue a PhD is the opportunity costs. CPAs are often reluctant to give up between three and five years of salary and possibly relocate their families.

One of the most frequent questions of academics is, “What kind of financial support is available while pursuing a doctoral degree?” This concern closely mirrors PhD program directors’ rationale for why more students do not pursue a PhD. Several PhD program directors speculated that professionals do not pursue a career in academia because the rising salaries in the business world mean higher opportunity costs in obtaining a PhD.

Every university represented in the survey gave some form of tuition waiver. Most universities gave a full tuition waiver, while one public university gave a waiver for the in-state portion of tuition and required students to pay the out-of-state portion. The mean tuition waiver was $16,559 per year and ranged from a low of $8,000 at public universities to a high of $30,000 at private universities. Most universities also offered an academic fellowship and a salary stipend for either teaching classes or being a research assistant. The dollar amount of the fellowships varied greatly. The average fellowship award was $13,132 per year, ranging from a low of $3,000 to a high of $28,000. The average salary stipend for teaching classes or being a research assistant was $12,062 for the nine-month academic year. Several universities paid health insurance for their PhD students. These findings were consistent with those of the AAA/APLG study, which found that the median stipend for a research or teaching assistant was $15,000. Another possible source of income for PhD students is teaching summer courses. The AAA/APLG study found that summer funding averaged $3,000, ranging from $1,000 to $9,000. Exhibit 2 summarizes the financial support available for accounting PhD students.

Other sources of funding include fellowships and scholarships for minority students. Two of the best known are the AICPA Fellowship for Minority Doctoral Students and the KPMG Minority Accounting Doctoral Scholarship. These fellowships typically range from $8,000 to $12,000 per academic year. The primary objective of the AICPA Fellowship for Minority Doctoral Students is to enable more minorities to enter and move ahead in the profession and academia. For the 2005–2006 academic year, AICPA fellowships were awarded to 18 individuals pursuing their PhDs. Through the 2005–2006 academic year, the AICPA program had assisted 53 individuals in completing their doctoral programs. The KPMG Minority Accounting Doctoral Scholarship is renewable for up to five years and included 25 students at the end of the 2005 academic year.

Besides living expenses, students typically have to pay student activity fees, buy textbooks and course research materials, and purchase various statistical and research software. Most universities do not provide medical insurance to PhD students, so students should purchase a policy. Students should also be prepared to pay for attending academic research conferences, as most universities will pay only a small portion of the costs. The AAA/APLG study indicated that travel stipends ranged from $500 to $5,000.

Salary Expectations

Due to the PhD shortage over the last few years, salaries have continued to outpace inflation. At many universities, new PhDs earn more than current professors who have held doctorates for several years. For the 2005–2006 academic year, AACSB International reported the mean salary for a new doctorate in accounting at an AACSB accredited university was $118,500 for a nine-month academic contract. The mean salary for a new doctorate exceeds that of both assistant and associate professors. Exhibit 3 lists the average nine-month faculty salaries. It is also possible to earn additional compensation in the summer by either teaching classes or receiving a summer research grant. These amounts typically range between 12% and 25% of the nine-month salary, depending on the university.

Seize the Moment

This is an excellent time to pursue a PhD in accountancy. PhD programs are seeking highly qualified CPAs who want to pursue a career as an accounting professor. The job market for new PhDs should remain strong for several years due to the anticipated retirement of older professors and the current shortage of new professors. CPAs interested in pursuing a career in academia should speak to professors and current PhD students before taking this path. These conversations will provide further insight and real world knowledge about what is expected of both PhD students and professors.

Bill Francisco CPA, CMA, is an assistant professor at Austin Peay State University, Clarksville, Tenn. Thomas G. Noland, PhD, CPA, CMA, is an associate professor at the school of accountancy at Georgia Southern University, Statesboro, Ga., and currently serves as an academic fellow in the SEC’s Office of the Chief Accountant. Debra Sinclair, PhD, CMA, is an assistant professor, also at the school of accountancy at Georgia Southern University, Statesboro, Ga.