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Remarks on Creativity & Innovation in Accounting Scholarship. Presentation by Greg Waymire AAA GNP Section Meeting San Diego, CA March 2, 2012. Outline for Today. Back to the Future. Imagination & creativity are necessary for success in scholarship, but are low in accounting research.
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Remarks on Creativity & Innovation in Accounting Scholarship Presentation byGreg WaymireAAA GNP Section Meeting San Diego, CAMarch 2, 2012
Outline for Today • Back to the Future. • Imagination & creativity are necessary for success in scholarship, but are low in accounting research. • What will accounting scholarship look like 20 years from now? • Closing thoughts on improving accounting research & education.
Back to the FutureA Survey of 1955 Accounting Review • Littleton, A. C., “The Logic of Accounts.” • Trueblood, Robert and W. W. Cooper, “Research and Practice in Statistical Applications to Accounting, Auditing, and Management Control.” • De Roover, Raymond, “New Perspectives on the History of Accounting.” • Horngren, Charles, “Security Analysts and the Price Level.”
Takeaways from the State of Accounting Research in the mid-1950s Would have been nearly impossible to see the magnitude of change coming less than 15 years later. (Horngren’s thesis was ahead of its time.) Change in scholarly research is discontinuous and rapid when it comes. (Thomas Kuhn) Specific nature of change cannot be predicted. The BIG ISSUE is: Survival in response to uncertainty and the new opportunities created by change. Can we foster the imagination & creativity needed to pursue such opportunities?
Imagination & creativity are needed even in accounting scholarship. • Research and education starts with “telling stories” or doing “thought experiments,” and then exploring the implications of those stories. • What are the consequences of stories, thought experiments, and serious inquiry? - We become more knowledgeable about context. - We better envision the counterfactual and mentally deconstruct modern institutions. (“Some see things as they are and say why while others dream things that never were and say why not.” G. B. Shaw) • This is the starting point for transformingtraining centered on specific applications to education derived from theory, concepts, and genuine knowledge of the what and why of how the world works.
A case from accounting history that lets us see a counterfactual Excerpts from the most interesting annual report I’ve ever seen
Ain’t this just amazin’?
R&D fully expensed And, intangibles written down to $1!
From the Auditor’s Opinion LOCOM forInventories
From the Auditor’s Opinion (cont.) “True” Financial Condition Non-U.S. Auditor
So, what is learned from GE in 1907? • High stock valuations by investors do not require “representationally faithful” financial statements (GE was one of the most highly valued common equities among NYSE industrials) • Voluntary disclosure doesn’t imply zero disclosure or disclosure subject to overstatement
Stagnancy in accounting academia? • Research is derivative and lacking in originality. • Lots of careerism. • Limited scholarly debate. • Disconnected from practice in setting our research & education agendas. • We think we know more than we actually know. • Are we educating people or do we just get high teaching ratings? • BOTTOM LINE: WE ARE LEAVING PILES OF MONEY ON THE TABLE.
Will accounting scholarship be the same in 20 years? • Is it possible somebody could “move our cheese?” • Is somebody moving it as we speak? • Can’t we better identify & pursue new opportunities for learning about the subject we study and teach? • These opportunities might be gaining traction in other disciplines right now.
Here’s the kind of picture that we might see in The Accounting Review10 years from now.
Revenue Recognition by Macaque Monkeys Neuronal Activation in the Ventral Tegmental Cortex Reported by Fiorillo et al. (2003) Based on Single Cell Recording for Two Macaque Monkeys in Response to Probabilistic Signals about Forthcoming Rewards Stimulus Sale Made Reward Cash Collected Stimulus Sale Made Reward Cash Collected Firing at actual receipt of reward when probability low Firing at signal of future reward when probability high
The Aspiration Hopwood, A. 2007. Whither Accounting Research? The Accounting Review.
Can We Change Matters in the Long-Run?Planting Seeds of Innovation with Excellence. • 2011 AAA Strategic Retreat was focused on encouraging innovation in accounting scholarship • Several promising (preliminary) ideas surfaced at the Strategic Retreat • The Current Challenge: Continuing the Conversation • Publishing the output • Conversation with broad membership online and at meetings • Concrete proposals directed at issues that resonate with membership
Where to Next?Continuing the Conversation • Putting Strategic Retreat output into the public domain (posting presentations, write-ups on SSRN, and pubs in Horizons and Issues.) • Using online venue in AAA Commons for discussion and debate by AAA members • Identification of proposals that likely will have broad support among AAA members. • Task force co-chaired by Christine Botosan and me.
