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Should CPAs Consider a PhD?

I have written previously  about accountants getting an MBA or EMBA. This post looks at another career change -– getting a PhD to become a professor. The topic has been well covered here before; my post will talk more about my personal experience and opinions.  

I became a college professor eight years ago after a 28-year career at PwC. I retired at 50 enabled by PwC’s generous retirement program for partners and motivated by a desire for a second career. I tried retirement first, but it didn’t take. My golf handicap dropped to under ten, but I still needed more intellectual stimulation and entered a PhD program at Macquarie Graduate School of Management in Australia. Getting a PhD was about as hard as making partner, but it enabled a fascinating second career for me.

I love teaching, and I love research, so the job is a good fit for me. It has also opened doors I didn't expect. I served two years on the PCAOB’s Standing Advisory Group, and testified before the U.S.-China Economic and Security Review Commission that was set up by Congress. I am the go-to guy for reporters on accounting and auditing issues –- particularly with respect to China. I even published my doctoral thesis as a book.

But, as my doctoral supervisor once told me, the three best things about being a professor are June, July and August.

Most CPAs can get a teaching job at a university without a PhD, but some schools will require a master’s degree. Many professors have public accounting experience. I wish business schools required prior professional experience, since it is difficult to be an effective teacher without real world stories. Most professors with public accounting experience got it before their PhD, and typically left the CPA profession before making manager. Many partners teach a course or two after retirement, but few get a PhD since it's a major commitment. In fact, I only know of two retired partner/professors who got a doctorate after retirement -– Richard Clune of Kennesaw State and me, although there may be more. One reason to get a PhD is that you will never be treated as a full member of the academic club without one. 

Getting into a PhD program is not that difficult, and students rarely pay tuition, instead usually getting paid to do the program. But to earn a PhD you are looking at four or five years of subsistence living, and very hard work.

A 2007 study found that 53.4% of accounting faculty are 55 and over. The average age is probably higher today, and retirements outpace the production of new PhDs. My undergraduate school, Western State Colorado University, lost two of three accounting faculty last year to retirement. I am taking a sabbatical to teach there next spring while they look for replacements (and to get in some skiing).

So there are lots of jobs for accounting faculty, and they pay better than most faculty jobs. New professors often make more than experienced ones, and new PhDs commonly get multiple offers around $150k at top schools. At a smaller school you might earn $100k, but also have less pressure to publish in top journals, instead carrying a heavier teaching load. But those salaries are likely far below what these people could earn in public accounting. Many professors supplement their income with consulting and outside seminars. Adjunct professors make considerably less, averaging $48K. All worse than public accounting, but there is June, July, and August. Accounting firms like to talk about work-life balance; I live it.

A PhD in accounting often is not really about accounting. The most popular research track uses econometric techniques to tease out new relationships from data pulled from financial statements. I don’t find most of this research useful all it seems to be is refining the calculation of how many angels can dance on the head of a pin. I favor sociologically based research, which includes behavioral and historical work. This kind of research may be more interesting, but can make it harder to get a job at a top university or to get the beloved tenure. I have the first and I am not interested in the second.

Life as a professor is about a balanced scorecard. There are three parts to the job –- research, teaching, and service. Most professors are expected to turn out research in order to be promoted or get tenure. At top schools you have to publish in top journals, which are read by no one and are nearly impossible to get published in. It can take years to get an article into a top journal, meaning it is usually obsolete by then anyway. Lesser schools are more flexible, accepting articles published in the Journal of Accountancy or other business publications (but probably not Going Concern).  Young professors at top universities live like senior managers in accounting firms, working long hours to publish articles that prove they are good enough for promotion and tenure. 

Teaching is less important for promotion at many research schools. Students have a lot of power and their evaluations are important in determining whether you get promoted. But without the research, few schools will even look at the evaluations. If you teach at a community college or small state school, teaching ratings may be the only thing that matters. Teaching loads vary depending on research expectations. My teaching load at my present research school is four semester hours each semester. When I am at Western State Colorado University I will teach a full load of 12 semester hours. 

Service is what accountants call non-chargeable work. It involves helping to run the school, serving on committees, and participating in outside organizations. It is not valued much in academia any more than it is in public accounting, but everyone has to do some of it. I do a lot of service, mostly because I am under less pressure to publish than my colleagues.

If you are under 40 and want to change careers, a PhD program will let you do that. To get into a top program you will need a GMAT score over 700 (top 15%) with great math skills. I changed to a different research methodology when I found myself in Barnes & Noble reading calculus textbooks at midnight. Older students may benefit from a PhD program, but if they are mostly interested in teaching, they can just jump into that, perhaps starting on a part-basis as an adjunct faculty. You won’t make much of a living as an adjunct, however.

There are also Doctor of Business Administration (DBA) programs designed for mid-career professionals. Some of these are offered by for-profit schools and are of dubious quality, but there are good programs. The DBA may be coursework focused, instead of research, and typically is more practically oriented. The DBA degree is less respected than the PhD in academia; I started my studies in a DBA program and was soon advised to switch to a PhD.

So, if you want to make a career change that will allow you to get serious about work-life quality, think about getting a PhD.  And remember the three best things -– June, July, and August.