Accounting Scholarship That Advances Professional Knowledge and Practice

by Robert S. Kaplan

Overview — Accounting scholars generally do a fine job of analyzing how we process accounting data, but they ought to spend more time looking at how that data is produced, says Harvard Business School professor Robert S. Kaplan. In this paper—in response to a newly minted professor who sought his advice—Kaplan reminds young scholars that accounting is more of a professional discipline than an academic subject. To that end, he advises them not just to teach their students the common body of accounting knowledge, but also to advance that body of knowledge by bridging the gap between scholarship and practice. Key concepts include:

Accounting professors have a responsibility not just to dispense knowledge but also to advance it, especially in a time when the profession is changing rapidly.
Risk management is a great issue for accounting academics to tackle. One, it is clearly relevant, due to the massive bank failures in the past few years. Two, it encompasses issues important to both academic study and professional practice-including reporting, disclosure, management control, and auditing.
Young accounting professors should spend time teaching in executive education programs, which will give them an opportunity to get feedback from experienced professionals.

Author Abstract

Recent accounting scholarship has used statistical analysis on asset prices, financial reports and disclosures, laboratory experiments, and surveys of practice. The research has studied the interface among accounting information, capital markets, standard setters, and financial analysts and how managers make accounting choices. But as accounting scholars have focused on understanding how markets and users process accounting data, they have distanced themselves from the accounting process itself. Accounting scholarship has failed to address important measurement and valuation issues that have arisen in the past 40 years of practice. This gap is illustrated with missed opportunities in risk measurement and management and the estimation of the fair value of complex financial securities. The paper encourages accounting scholars to devote more resources in order to obtain a fundamental understanding of contemporary and future practice and how analytic tools and contemporary advances in accounting and related disciplines can be deployed to improve the professional practice of accounting.