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MARKET FOR ACCOUNTING FACULTY:DETERMINANTS OF SALARY,PUBLICATIONS, ANDMOVEMENTSharad AsthanaUTSAAndSteven BalsamTemple University(Very Preliminary)April 2011

RESEARCH QUESTIONSWhat are the determinants of accounting facultysalary?o Quantity and quality of publications?o Quality of the employing Schoolo Quality of the School from where youobtained PhD?o Experience?o Faculty Rank?What are the factors affecting facultypublications?What are the factors that determine facultylongevity?2

SAMPLE SELECTION PROCEDURESalary Data obtained under Freedom of Information ActFaculty details obtained from Hasselback and Official andPersonal faculty Websites (Graduating institution; year ofgraduation; year of hire; faculty rank)Publication details obtained from Proquest, Google Scholar,Official and Personal faculty WebsitesCost of living data obtained from Government websiteRanking of Institutions obtained from Carnegieclassification and Public Accounting Report publicationsJournal ranking obtained from:“Examining Accounting Departments’ Rankings of theQuality of Accounting Journals,” by Alan Reinsteinand Thomas Calderon,Critical Perspectives in Accounting (2006, Vol 17):457-490Final Sample consists ofo 627 accounting faculty (500 in USA and 127 inCanada)o That graduated from 121 Doctoral Institutions aroundthe worldo Employed at 47 Business Schools in USA and Canadao Data ranges from 2008-2010 (one observation perfaculty)3

LIMITATIONS OF THE RESEARCHData is available for one time period only (snapshot) time-series data would allow for a muchricher analysisData on teaching performance is not available.Trying to hand-collect this fromRateMyProfessor.Com etc. (any suggestions?)Data on summer research grants is not available.May add noise to the SALARY variableData for Private Schools is not availableTotal number of moves during career notavailable. Will try to collect this from Facultywebsites.4

MAJOR CONCLUSIONSTIER 1 PUBLICATIONS ARE PRICED 1,666 MORE THANTIER2 PUBS ( 3,553 V/S 1,887 PER PUB). IMAGINE A 25YEAR ANNUITY PV 29,000 @ 3%)YOUR FIRST PUB IN TAR/JAR/JAE EARNS YOU ANAVERAGE SALARY INCREMENT OF 8% (COMPARED TO5.6% FOR A TIER2)CANADA APPEARS TO PAY MORE (MAY BE AFUNCTION OF PRIOR YEARS’ ADVERSE CURRENCYEXCHANGE RATES)SALARY IS A NON-LINEAR FUNCTION OF EXPERIENCE:FACULTY HIRED IN THE 21ST CENTURY EARNING MORETHAN THEIR COUNTERPARTS FROM THE 20TH CENTURY(AFTER CONTROLLING FOR EVERYTHING ELSE)FACULTY MEMBERS GRADUATING FROM HIGHQUALITY PHD PROGRAMS OR THOSE EMPLOYED ATHIGH QUALITY SCHOOLS EARN AN AVERAGE OF 11,000 MORE.AVERAGE BASE SALARY GOES UP BY 25,000 FOREACH FACULTY RANKHIGHER QUALITY SCHOOLS PAY HIGHER BASESALARY BUT SALARY INCREMENT ON GETTING APUBLICATION IS LOWER (WHY?)FACULTY WITH A PHD FROM A HIGHER QUALITYSCHOOL EARNS HIGHER BASE SALARY BUT SALARYINCREMENT ON GETTING A PUBLICATION IS LOWER(WHY?)5

PREMIUMS FORo TAR 5,000 JAE 4,000 JAR 3,000o (NOT SIGNIFICANTLY DIFFERENT)PROPENSITY TO STAY INVERSELY RELATED TOSALARY (COUNTER-INTUITIVE?) MAYBE THE FACULTYMOVED MORE FREQUENTLY TO INCREASE HISCOMPENSATIONMOVEMENT LESS FREQUENT AT HIGH QUALITYSCHOOLSQUALITY OF PUBLICATIONS o LOWER FOR CANADAo INCREASES WITH SALARYo INCREASES WITH PUBLISHING EXPERIENCEo INCREASES WITH QUALITY OF SCHOOLo INCREASES WITH FACULTY RANK6

TABLE 1VARIABLE DEFINITIONSCURRTENUREDUMCANADAEXPERIENCEVariable DefinitionsNumber of years faculty member has stayed on current jobDummy variable with value of 1 for faculty working in Canadian Schools; and0 otherwiseNumber of years experience faculty member has since obtaining PhDLOGCURRTENCost of living index in the city of employment (obtained from governmentsources)Natural logarithm of CURRTENURELOGEXPRNatural logarithm of EXPERIENCELOGSALARYNatural logarithm of SALARYLIVINGCOSTLOGTIER1PUBS Natural logarithm of TIER1PUBSLOGTIER2PUBS Natural logarithm of TIER2PUBSLOGTIER3PUBS Natural logarithm of TIER3PUBSLONGEVITYPUBQUALITYMeasure of longevity in career; estimated as CURRTENURE divided byEXPERIENCERank of the PhD program from where the faculty member graduated, based onCarnegie Classification of InstitutionsWeighted average of publication quality (tier1 3; tier2 2; tier3 1)SALARYTotal base annual salary of faculty member in US dollarsSCHOOLRANKTIER1PUBSRank of the School where the faculty member is currently employed, based onCarnegie Classification of InstitutionsNumber of peer reviewed publications in tier 1 journalsTIER2PUBSNumber of peer reviewed publications in tier 2 journalsTIER3PUBSNumber of peer reviewed publications in tier 3 journalsTOTALPUBSNumber of peer reviewed publications in all journalsPHDRANK7

TABLE 2LIST OF olBrock UniversityCarleton UniversityLakehead UniversityLaurentian UniversityMcMaster UniversityQueen's UniversityUniversity of OttawaUniversity of TorontoUniversity of WaterlooUniversity of Western OntarioUniversity of WindsorWilfrid Laurier UniversityYork UniversityArizona State UniversityMiami UniversityUniversity of IllinoisIowa State UniversityMichigan State UniversityUniversity of Missouri, ColumbiaAppalachian State UniversityEast Carolina UniversityFayettteville Sttate UniversityNorth Carolina A&T State UniversityNorth Carolina State UniversityUNC AshevilleUNC Chapel HillUNC CharlotteUNC GreensboroUNC PembrokeUNC WilmingtonWestern Carolina UniversityWinston Salem State UniversityRutgers UniversityState University of New York BuffaloOhio State UniversityClemson UniversityCoastal Carolina UniversityFrancis Marion UniversityUniversity Of South CarolinaWinthrop UniversityTexas A&M UniversityTexas State UniversityUniversity of HoustonUniversity of North TexasUT ArlingtonUT AustinUT San ouriN CarolinaN CarolinaN CarolinaN CarolinaN CarolinaN CarolinaN CarolinaN CarolinaN CarolinaN CarolinaN CarolinaN CarolinaN CarolinaNew JerseyNew YorkOhioS CarolinaS CarolinaS CarolinaS CarolinaS USAUSAUSAUSAUSAUSAUSAUSAUSAUSA8

TABLE 3RANKING OF JOURNALSRankJournalTier 1The Accounting ReviewTier 1Journal of Accounting and EconomicsTier 1Journal of Accounting ResesarchTier 2Contemporary Accounting ResearchTier 2Auditing: A Journal of Practice and TheoryTier 2Journal of Accounting, Auditing, and FinanceTier 2Journal of American Taxation AssociationTier 2Accounting, Organizations, and SocietyTier 2Journal of Accounting and Public PolicyTier 2Journal of Management Accounting ResearchTier 2Behavioral Research in AccountingTier 2National Tax JournalTier 2Journal of Information SystemsTier 2Review of Accounting StudiesTier 2Accounting HorizonsTier 3All other peer reviewed JournalsSource: “Examining Accounting Departments’ Rankings of the Quality of Accounting Journals,” byAlan Reinstein and Thomas Calderon, Critical Perspectives in Accounting (2006, Vol 17):457-4909

TABLE 4SAMPLE CHARACTERISTICSPanel A: Sample Distribution(n NKFACULTYRANKMean 450.50080.42742.7464Median 001.00000.00003.0000Std.Devn. .50040.49511.1794Quartile 1 000.00000.00002.0000Quartile 3 8001.00001.00004.0000Panel B: Cross-Country Comparison(n RANKFACULTYRANKUS Schools500 680.46002.6760Canadian Schools127 71**-2.45-0.340.98***-5.60***3.29***-2.9910

TABLE 4 (Continued)Panel C: Comparison across Quality of the US Schools Employing the Faculty(n RANKFACULTYRANKSCHOOLRANK 0 1212288 134,981 35Panel D: Comparison across Quality of the School Granting Doctorate to the Faculty(n OOLRANKFACULTYRANKPHDRANK 0359 860.41232.6017t-Statistics 1268 -5.360.880.08-0.32***-5.23***-3.5911

TABLE 4 (Continued)Panel E: Sample Characteristics by Salary range(n INGCOSTSCHOOLRANKPHDRANKFACULTYRANK 50436.8581% 00.60470.23261.2093Mean Values for Faculty Salary Range (in 13.0781% 38.2775% 29.6651%8.6124%2.2329% 73,547 127,382 171,289 217,929 712.85422.98393.53704.0000 30181.2759% .36250.75000.37504.250012

TABLE 4 (Continued)Panel F: Sample Characteristics by Faculty Experience(n 5 umber of Years Experience11-2021-30131282 143,249 .35112.73282.62410.44270.48580.45040.3227 31129 Panel G: Sample Characteristics by Faculty Rank(n RANKInstructor119 0.3361Assistant147 40.3605Faculty RankAssociate166 50.4518Full164 9020.5061Endowed31 290.5484See Table 1 for variable definitions.*** implies significance at 1% level (two-sided)** implies significance at 5% level (two-sided)* implies significance at 10% level (two-sided)† implies significance at 10% level (one-sided13

TABLE 5CORRELATION 09-0.01727-0.07110.22532-0.073520.136790.54158( 0.0001)( 0.0001)( 0.0001)( 0.0001)(0.6661)(0.0752)( 0.0001)(0.0658)(0.0006)( 0.29843-0.130620.11856(0.0106)(0.2167)( 0.0001)(0.3514)(0.4842)( 0.0001)( 80.200870.203310.233450.34501( 0.0001)( 0.0001)(0.6034)(0.0725)( 0.0001)( 0.0001)( 0.0001)( 60.072030.162040.156510.244980.4233( 0.0001)(0.9628)(0.0715)( 0.0001)( 0.0001)( 0.0001)( 0.0001)0.175880.20690.18998-0.117330.186640.54181( 0.0001)( 0.0001)( 0.0001)(0.0033)( 0.0001)( 0.0001)0.659720.05903-0.07672-0.07180.298( 0.0001)(0.1398)(0.0548)(0.0724)( )(0.0808)( 0.0001)-0.42223-0.012610.22664( 0.0001)(0.7526)( 0.0001)0.20495-0.20132( 0.0001)( 0.0001)0.14216(0.0004)See Table 1 for variable definitions.p Values in parentheses14

TABLE 6BASE REGRESSIONS EXPLAINING FACULTY SALARYPanel A: Using Raw VariablesDependent Variable SALARY (in 000)VariablesEstimates Std. Err.t Stats p-ValueEstimatesStd. Err.t Stats p-ValueIntercept***110.65887.425014.90 0.0001 ***110.71917.470414.82 0.0001DUMCANADA***18.21143.93514.63 0.0001 ***18.26784.97413.67 0.0003TIER1PUBS***3.55330.66505.34 0.0001***3.54520.69825.08 0.0001TIER2PUBS***1.88650.52733.58 0.0004***1.78950.57643.10 0.0020TIER3PUBS-0.05450.1789-0.30 0.76060.00040.23060.00 0.9986EXPERIENCE***-3.97050.5591-7.10 0.0001***-3.98030.5608-7.10 0.0001EXPERIENCE*EXPERIENCE***0.05170.01234.22 0.0001***0.05200.01234.23 0.0001SCHOOLRANK***11.39113.29823.45 0.0006 ***11.47093.32333.45 0.0006PHDRANK***10.89523.23173.37 0.0008 ***10.84413.28023.31 0.0010FACULTYRANK***24.67501.519116.24 0.0001 ***24.64561.529016.12 0.0001TIER1PUBS*DUMCANADA0.48342.49940.19 0.8467TIER2PUBS*DUMCANADA0.49591.44440.34 0.7315TIER3PUBS*DUMCANADA-0.13420.3527-0.38 0.7037Comparison of Coefficients Coefficient of TIER1PUBS Coefficient of TIER2PUBS Coefficient of TIER3PUBSObservations627627Adjusted R-Square0.57880.5763F Value83.9262.65Probability F 0.0001 0.000115

TABLE 6 (Continued)Panel B: Using Log-Transformed ALOGTIER3PUBS*DUMCANADAObservationsAdjusted R-SquareF ValueProbability 0 0.0001Std. 740.0137Dependent Variable LOGSALARYt Stats p-ValueEstimatesStd. Err.67.53 0.0001***4.99750.07424.79 0.0001***0.23740.05623.43 0.0006***0.08330.02562.66 0.0081**0.05790.0237-1.64 0.1024-0.01370.0147-12.11 0.0001***-0.29550.02431.57 0.1160*0.04710.02843.56 0.0004***0.10570.027916.83 03360.02936270.556065.38 0.0001t 3-0.31-1.15p-Value 0.0001 0.00010.00120.01480.3519 0.00010.09840.0002 0.00010.40550.75930.2524See Table 1 for variable definitions.*** implies significance at 1% level (two-sided)** implies significance at 5% level (two-sided)* implies significance at 10% level (two-sided)16

TABLE 7COMPARATIVE REGRESSIONS ACROSS DIFFERENT REGIMESPanel A: USA versus Canada (Dependent Variable SALARY in 000)USACanadaVariablesEstimates Std. Err.t Stats p-ValueEstimatesStd. Err.t Stats p-ValueIntercept***123.75817.436516.64 0.0001 ***94.786213.07847.25 0.0001TIER1PUBS***3.31120.65045.09 0.0001***4.99011.80842.76 0.0069TIER2PUBS***1.74510.53583.26 0.0012*1.70560.99821.71 0.0906TIER3PUBS0.08930.21500.42 0.6780-0.13010.2056-0.63 0.5281EXPERIENCE***-5.60160.5561-10.07 0.00011.61421.05571.53 0.1294EXPERIENCE*EXPERIENCE***0.07400.01236.04 0.0001-0.01840.0228-0.81 0.4211SCHOOLRANK**6.95233.39702.05 0.0413PHDRANK***9.73223.52092.76 0.0060**11.29324.89732.31 0.0232FACULTYRANK***29.03071.568618.51 0.0001***6.97642.54762.74 0.0073Comparison of Coefficients Coefficient of TIER1PUBS Coefficient of TIER2PUBS Coefficient of TIER3PUBSObservations500127Adjusted R-Square0.68140.6347F Value115.7224.67Probability F 0.0001 0.000117