The Accounting PhD (#378)

Should you earn an accounting PhD? If you become an accounting professor, what are your options for going back into accounting practice?

The Accounting PhD Options

If you get a PhD in this field, the main career track is to be an accounting professor. You could get a job in something else, such as working with an audit firm or being an accounting manager. But if you do, consider whether the cost-benefit is effective. It will take a solid five years of work after getting a bachelor's degree, and possibly a master’s degree, too, and during that time your compensation is going to be pretty low. So, you’ll be trading away a half a decade of your life in exchange for a PhD.

So let’s talk about the roles for a freshly-minted PhD. I’ll leave the obvious one of being an accounting professor for last, and start with auditing. As I’ve pointed out in other episodes, the audit track at a major audit firm is designed to take in younger people and put them on a rigid path that either kicks them out or turns them into partners about 15 years later. So if you’ve already spent the minimum of an extra five years to pick up a PhD, you’ll already be well behind all those other youngsters. You might even be starting off as a staff auditor and reporting to people who are younger than you.

Next up. What about applying for a job as an accounting manager in the private sector? Sure, you could, but I’m not sure if there’s any advantage to having a PhD. Manager positions require a history of – well, managing – which you will not have built up while getting the PhD. If anything, having a PhD on your resume might even be off-putting for potential employers, since they won’t know if you’re planning to leave the job to go back to academia.

And then we have the accounting professor option. The good news is that there’s a shortage of professors out there, so you can probably get a job. Though a downside is having to move to wherever the university is located, so you might end up in a less desirable location. Compensation is a tough one to pin down. According to the job sites, you can start at under $100,000 and go over $200,000, while the mid-range is somewhere around $125,000 to $175,000.

In short, the only realistic career track for an accounting PhD is to become a professor. For any other adjacent career tracks, having a PhD doesn’t provide you with any particular advantage, and if anything, it could be a hindrance.

I’m not trying to argue a case not to get a PhD, though. If you like to teach, then this could be perfect for you. And especially if you like taking your summers off. And if you can get tenure, then it’s a very stable job.

Moving from Academia Into Business

Next, what is the career path if you want to go from an accounting professor into accounting practice? As I’ve already pointed out, going into the private sector as a manager or going into an audit firm as an auditor don’t really give you any advantages. But there are a couple of possibilities.

One option is to go into a highly specialized area, like the accounting for derivatives. This might be the case where a large bank or an international company wants to have an on-site expert who can reliably deal with that very specific area. In essence, you’d be locked into a role as an expert, so there might not be a great chance at being promoted out into a more general role. The same option goes for a large audit firm. The Big Four always have people on staff who are expected to be absolute experts in very specific areas, and they’re expected to advise audit managers who have questions. These positions can pay quite well.

And then there’s the possibility of going out on your own as a CPA. A lot of accounting professors have CPA certifications, and if so, then this is an OK option. If so, putting “PhD” on your business card might attract a few more clients who might be impressed by it. On the downside, as a sole practitioner, you’ll have to attract clients, and that is not easy. You’ll likely be working with smaller clients, and to do even that, you’ll probably have to charge lower fees.

Which brings me to one more option, and maybe the best one for accounting PhDs. If you’re already a professor, then a common side gig is to do consulting on any number of topics. You can do research on topics that might attract the attention of large multinationals, and build up quite a good consulting practice on the side. If it eventually generates enough income, then you might be able to drop the professor position and just be a full-time consultant.

So, in short, an accounting PhD tends to result in exactly one job, which is accounting professor. And once you have it, you’d better like being a professor, because the options to get back out are rather limited – or at least very tightly defined.