This study evaluates the auditing profession's diversity outcomes by comparing diversity along the university to job pipeline for auditing and other comparison disciplines. My tests show consistently anomalous outcomes for Black people in the audit labor pipeline, and therefore, I focus the study on them. I find that, among college freshmen planning to major in accounting, Black college freshmen are significantly overrepresented relative to freshmen planning to major in other business disciplines or nonbusiness disciplines. I find evidence of Black underrepresentation in the audit labor pipeline at every subsequent point: among accounting bachelor's and master's degree recipients, in the audit firm recruiting process, and among young professional auditors. My evidence of especially sharp Black attrition from accounting degree programs is, to my knowledge, novel. Although I lack sufficient data to pinpoint the mechanisms causing this sharp Black attrition from accounting degree programs, my findings are inconsistent with the popular theory that Black college students are distinctively uninterested in pursuing accounting education. It is not yet possible to make well‐targeted and data‐driven policy prescriptions to counter Black attrition from accounting degree programs because its causes are not well understood. Universities could contribute to the diagnosis process by systematically collecting and distributing data characterizing when and why students select away from accounting. My findings on audit firm recruiting are inconsistent with popular theories that Black underrepresentation in audit firms is attributable to overtly racially biased recruiters or lower interest among Black accounting graduates in pursuing careers in audit firms. Rather, my findings conform best with unintentionally biased recruiting by audit firms, which appear to make recruiting investments using outdated definitions of school quality. My evidence suggests that campus‐recruiting leaders within audit firms have the opportunity to hire more Black auditors without reducing the quality of the schools from which they recruit.

For decades, prominent members of the accounting community have argued that the quality of accounting education is falling. Support for this claim is limited because of a scarcity of data characterizing the constructs of interest. This study is a comparative evaluation of the quality of accounting education from the 1970s to the 2000s using unique data to quantify education quality for accounting and many comparison disciplines. I find that, compared to most other types of college education, accounting education quality has been steady or increasing over the sample period. However, relative to other business degree programs, the evidence is mixed. The quality of students self-selecting non-accounting business degrees has increased while the quality of accounting students has not. The disparity in student quality is not reflected in the pay received by accounting graduates, which has remained stable relative to the pay received by graduates with other business degrees, although this result is likely influenced by regulatory changes during the 2000s, including Sarbanes-Oxley (SOX). Together, the evidence suggests that the quality of accounting education has not declined rapidly over the last four decades, but in the competition among business degree programs for high-quality students, accounting has underperformed. Data Availability: Data used in this study are available in the Freshman and Senior Surveys of the Cooperative Institutional Research Program's Higher Education Research Institute at the University of California, Los Angeles; the IPUMS-USA database, which is compiled and distributed by the Minnesota Population Center at the University of Minnesota; the National Survey of College Graduates, which is available from the National Science Foundation; and the General Social Survey, which is maintained by the National Opinion Research Center at The University of Chicago.

Following the Civil Rights Movement and the “quiet revolution” in women's work over the years from 1950 to 1970, women and minorities increasingly joined the auditing profession while the profession ramped up efforts to encourage integration. The purpose of this study is to rigorously examine how the integration of auditors has evolved since the civil rights and quiet revolution period. The primary distinctive feature of this study is that it evaluates the auditing profession's integration by comparing it to samples of occupations similar to auditing for the purpose of isolating auditing-specific forces influencing integration. I find that the pay structure in auditing is unusually equal, consistent with “equal pay for equal work.” The results for women, Hispanics, and miscellaneous minorities are consistent with members of these groups responding as one might expect to equal pay in auditing: groups that are poorly paid in other occupations select into auditing at higher rates, and groups that are well paid in other occupations select out of auditing at higher rates. The results for blacks are anomalous in that their pay in auditing has been good relative to many comparable occupations, but they have nevertheless been poorly represented in auditing. There are a number of theories that could potentially explain why blacks may be anomalously underrepresented in auditing. To begin to test them, I perform an exploratory analysis of the representation of women and minorities among college freshmen, college graduates, and young auditors. The results suggest that accounting is a popular degree among black college freshmen and that a relatively high percentage of accounting graduates are black. However, although they are well represented in the pool of potential new auditors, black accounting graduates enter the auditing profession at very low rates relative to other occupations requiring levels of education similar to auditing. The results suggest that black underrepresentation in auditing is not due to a lack of awareness among, or role models for, young blacks. Data Availability: Data used in this study are available in the IPUMS-CPS database, which is compiled and distributed by the Minnesota Population Center at the University of Minnesota; the National Survey of College Graduates, which is available from the National Science Foundation; and the Freshmen Survey of the Higher Education Research Institute, which is available to registered users of its website.

There is disagreement in the accounting community about what level of standardization would be efficient for accounting. Many of the known costs and benefits of standardization have gone unmeasured and, as a result, there have been no efforts to quantitatively identify an efficient level of accounting standardization. Without guidance from researchers, the level of accounting standardization is set according to the intuition of standard-setters. Using data on a large cross-section of occupations, I provide evidence that the level of standardization in financial reporting occupations is far higher than would be expected given their characteristics. I then show with time-series data that the breadth of professional accounting discourse declined during the late 20th century, coincident with increases in the output of standard-setters. A lower quality discourse is one of many possible consequences of inefficient standardization. Data Availability: Occupations data in the O*NET, Career One Stop, and Occupational Employment Statistics (OES) databases are available from the U.S. Department of Labor. Data from the General Social Survey (GSS) are available from the National Opinion Research Center (NORC) at The University of Chicago. Contact the author for the data collected from the Accountants' Handbook.

We use theory from identity economics, which synthesizes research characterizing how personal identity shapes decisions in domains such as education and career selection, to predict that the process by which people sort into accounting careers produces a population of accountants with a distinctive set of values. Specifically, we hypothesize that two kinds of personal values, called conservation values and self‐enhancement values, are overrepresented among accountants because they are associated with the decision to work as an accountant. Using data from 38 countries in the European Social Survey, we find support for both hypotheses. Given this evidence that accountants' values prioritize stability over change and concern for self over concern for others, we further hypothesize that, motivated by these values, accountants will be relatively skeptical about contemporary targets of social reforms, including those pursued by prominent accounting organizations. We test this prediction using attitudes about climate change and tolerance for minorities and find support for it. Based on our findings, we derive recommendations for an effective design of social reforms in the accounting profession. Our findings are relevant for accounting elites tasked with leading the profession into a dynamic future and contribute to the new and growing literature on accounting's human capital.

Financial statement fraud generates many negative effects, including reducing people's willingness to participate in the stock market. If it also stigmatizes accounting, it may similarly adversely affect the quantity and quality of workers willing to become accountants, thereby potentially creating negative effects for years to come. We examine the impact of fraud on the labor force entering the accounting profession, which is a key input into the production of accounting information (i.e., the output). Using data describing millions of college students across the United States, we find incoming students are actually more likely to major in accounting when local frauds occur during their formative years. These students are also more likely to have attributes desired by the accounting profession (e.g., high academic aptitude) and are more likely to subsequently serve in public accounting and become Certified Public Accountants. In the context of other fields (i.e., all college majors), we find that fraud similarly spurs interest in other business disciplines, but not in majors outside of business schools. Those attracted to other business disciplines, however, generally possess different traits. Specifically, students entering accounting are distinctively more likely to exhibit values espoused by the accounting profession, including a predisposition to public service and less commercial orientation. Thus, nonpecuniary motives appear to uniquely drive accounting student enrollment following fraud. Collectively, our findings suggest that, while fraud is unmistakably bad, it appears to have the positive unintended consequence of attracting labor into business disciplines and, in accounting, increasing the prevalence of desirable traits among entrants.