29 As predicted, the results show a negative interaction effect in which low SES interest in
accounting is lower in recession years, and this decrease is greater in accounting than it is in business fields and in the set of all fields. This interaction is striking because, in both columns of
Table 5 Panel B,
Recession
is associated with higher interest in accounting. That is, interest in accounting among low SES individuals
is lower
during times when overall interest in accounting is
higher.
We argue that this is due to people from poorer backgrounds adopting faster trajectories in their life history strategies when they observe cues of economic uncertainty. Importantly, if the
recession interaction effect simply reflected fewer low SES individuals in college during recessions due to lower application rates or higher dropout rates, then lower SES representation in
accounting would not differ from that of other fields. Thus, our multivariate analyses support H3. In sum, these archival analyses provide evidence both that our theorized relations
generalize in a large-sample dataset of millions of real choices and that the effects are robust over time. Low SES individuals disproportionately prefer accounting because it is consistent with a
slow life history strategy. However, recessions affect patterns of selection into accounting differently than other fields, as the preference for accounting by low SES individuals
disproportionately weakens.
6. Supplemental Analyses
In this section, we explore the potential implications of our findings for the profession and for low SES individuals. Specifically, our supplemental analyses first examine implications for the
quality of human capital entering accounting, i.e., under what conditions do our theorized effects have benefits for accounting? We then examine job outcomes of those who select into accounting
and of low SES individuals who select accounting, as opposed to other fields. This provides some
– 2000. This likely reflects other, often new business fields e.g., information systems growing in popularity at a faster rate than accounting enrollments over the past several decades Madsen 2015.
30 evidence as to whether or not accounting is a slow life history choice relative to common
alternatives, and whether the benefits of a slow life history strategy materialize similarly for low SES individuals and high SES individuals. If our theory suggests that accounting attracts entrants
because of its security, then this analysis helps identify if accounting delivers this security. 6.1. Implications for the Quality and Diversity of Human Capital Entering Accounting
6.1.1. Low SES, Self-Selection, and Human Capital
We first examine implications of our effects for the quality of human capital in the entry- level accounting labor pool. To do so, we analyze equation 1 at each possible level of
lowSES
to examine if any of the desirable human capital attributes vary with low SES.
24
Recall that the
lowSES
values indicate how many of three low SES indicators a person possesses, thus SES is
lower as the number of
lowSES
indicators increases. The first noteworthy finding is that the data are consistent with the low SES effect increasing gender diversity in the accounting labor pool. As
shown in Table 6 at the lowest SES level
lowSES
= 3, 1.455 women select accounting for every woman who selects another business field and 1.149 women select accounting for every woman
who selects another non-business field. By contrast, women from wealthier backgrounds tend to select accounting at disproportionately low rates.
In addition, recall that the results in Table 4 Panel B identified potential deficits in the accounting labor pool. Our expert panel identified writing skills and self-confidence as critical to
distinguishing successful performers in accounting, but the results show that accounting entrants lag in these categories. However, Table 6 suggests individuals selecting accounting possess higher
levels of these attributes as
lowSES
increases, relative to business fields and to other fields. In
24
We also run a model with interaction terms of lowSES with each of the other variables, and the results are comparable. We report the decomposed models at each level of lowSES because doing so provides the reader more
information about trends in the data and because the odds ratios are more interpretable in this format.
31 brief, the results indicate that the quality of the entry-level accounting labor pool benefits from the
low SES effect.
25
6.1.2. Do Recessions Undermine Human Capital Benefits for Accounting?
If the low SES effect channels quality talent into accounting, then H3 could naturally decrease representation of this talent and have negative implications for accounting. To assess
implications of H3, we analyze a version of equation 2 which has been modified to include interactions of the
Recession
indicator variable with our control variables at each possible level of
lowSES
. As shown in Table 6 Panel B, two noteworthy effects emerge from this analysis. First, the odds ratios for the
Female Recession
interaction are less than one across many levels of
lowSES
, particularly when the comparison group is all non-accounting degrees. Thus, the recession effect disproportionately reduces the representation of females from
poorer backgrounds. That is, the low SES effect appears to increase gender diversity in accounting but uncertain economic conditions
reverse
this positive effect. This may suggest that bad economic times undermine accounting’s potential to act as a secure path to business careers
for women from poor backgrounds.
That is, a gender gap may exist in the potential for accounting to elevate those from poorer backgrounds. Future research into this possibility is warranted.
Second, there is a significant
GPARecession
interaction with an odds ratio greater than one for most levels of SES. This appears to benefit accounting on the surface, as academic ability
increases relative to other business fields and to all other fields. We rerun equation 2 at each level of reported GPA in the HERI data in order to more deeply examine whether this effect is likely to
25
Inferences for other variables appear to differ depending on the comparison group, and are thus inconclusive. An exception appears to be that the odds of disadvantaged minorities selecting accounting appears to decrease as lowSES
increases. This suggests that the disproportionately high interest in accounting among low SES individuals may be driven by white, as opposed to minority individuals from poorer backgrounds. This is consistent with Hammond’s
1997 analysis of the accounting prof ession’s struggles to integrate minorities. Our results do show that interest in
accounting is disproportionately high among minorities from wealthier backgrounds, but the low SES effect appears unlikely to increase minority representation.
32 benefit accounting. In Table 6 Panel C, the results are not definitive, as the
lowSES Recession
interaction effect is negative for students averaging a B or B+, but positive for students averaging an A-. It is not significant at any other GPA levels. That is, recessions appear to negatively affect
selection into accounting among low SES individuals with above average, though not exceptional ability.
This finding may reflect subtle differences in how capability can affect a person’s life history strategy. Those with above average ability may fear being squeezed out by high ability
individuals, and thus lack confidence that they will be able to experience deferred rewards. As a result, low SES individuals in this group may revert towards a faster life history strategy when
they obse rve resource scarcity cues, in order to “get what they can when they can.”
6.2. Career Outcomes - Evidence that Accounting is Part of a Slow Life History Strategy
The remainder of our analyses focus on providing evidence that accounting is, in fact, a slow life history strategy relative to potential substitutes. Further, we examine whether low SES
individuals selecting accounting realize the benefits of a slow life history strategy —that is, does
accounting deliver on expectations? To address this question, we compare job outcomes of accounting degree holders to three comparison groups: 1 finance degree holders, 2 other
business degree holders, and 3 non-business degree holders. For brevity, we provide details on our sample and methodology in Appendix C, and summarize our findings here.
As indicators of a slow life history strategy, we examine whether accounting delivers relatively high mean wages with low wage variance, low unemployment, and high job security.
Table 7 reports career outcome results for those whose highest degree is a Bachelor’s degree in
the indicated field and for those whose high est degree is a Master’s degree, with the left columns
33 depicting the full sample and the right columns depicting the
low SES
sample only. Our
low SES
proxy is first generation college students. The data support our central theoretical assumption that accounting reflects a relatively
slow life history strategy. Accounting has a relatively high mean salary with a relatively low standard deviation, which suggests that accounting degrees lead to rela
tively high “wage floors.” Moreover, accounting degree holders have unemployment that is lower than in finance, other
business fields, and non-business fields. In general, our results indicate that, accounting careers on average deliver the attributes of a slow life history strategy. The data are roughly consistent in the
full sample of accounting degree holders and the sample of only
low SES
individuals, suggesting that low SES accountants do not experience worse labor market outcomes.
This contrasts with a striking pattern in finance, which is a common alternative to accounting. The data suggest that
Master’s degrees in finance deliver substantial rewards, but not for low SES
individuals. Low SES Master’s degree holders compare unfavorably to other finance Master’s degree holders in mean earnings 66,989 versus 87,826 and unemployment 9.88
versus 4.52. By contrast,
low SES
Master ’s degree holders in accounting are comparable to
other accounting Master’s degree holders in terms of wages 65,866 versus 68,552 and
unemployment 0.77 versus 0.93. A plausible explanation is that maximizing the benefits of a Master’s degree in finance
requires the type of social capital i.e., relationships with well-connected people that
low SES
individuals possess at lower rates. This is consistent with research by Rivera 2015 that hiring practices of financial institutions systematically favor those from wealthier backgrounds. By
contrast, social capital may not be as important in realizing the benefits of an accounting degree. This is consistent with our broader theory and suggests costs for low SES individuals choosing
34 accounting’s faster, most common alternative. If a low SES individual wants to compete on an
equal playing field in a business career, then accounting is a relatively safe and effective choice.
7. Conclusions and Future Research Directions
