Academic journal article Journal of Small Business Management

A Performance Contrast of Male- and Female-Owned Small Accounting Practices

Academic journal article Journal of Small Business Management

A Performance Contrast of Male- and Female-Owned Small Accounting Practices

Article excerpt

Men have historically occupied dominant positions in the accounting profession workplace. Much of the related literature reports that women accountants face different and additional barriers than men to succeed; these barriers are typically evidenced through gender differentiated promotion rates, salaries, and hiring rates (Glass Ceiling Commission 1995; Loprest 1992; White 1992). Research regarding wage rates in accounting has found that women employed as accountants generally earn less than equally qualified men (Schroeder and Riechardt 1995; Collins 1993; Berg 1988; Olsen and Frieze 1986; Corcoran and Duncan 1979; Malkiel and Malkiel 1973). The major source of the lower earnings of women is thought to be labor market discrimination against women (Bell, Randel, and Williams 1995; Cooper 1992; Lehman 1992; Kirkman 1992; Kuhn 1987; Levine 1985).

It has been argued that business ownership enables women to overcome such discrimination (Larson 1995; Walnut 1995; Cromie and Hayes 1988). Supporters of this idea point to the increasing number of women-owned businesses, including women-owned accounting firms. The number of women-owned businesses has increased about 45 percent since 1990 (Small Business Administration 1995), and the increasing number of women-owned accounting practices is seen as an indication that discrimination barriers in the economy and labor force are being overcome through business ownership and entrepreneurship (Light and Rosenstein 1995; Larson 1995; Walnut 1995; Hammond, Oaks, and Cooper 1992; Goffee and Scase 1983).

Literature Review

While the increase in business ownership by women is well documented, the effectiveness of this mechanism in overcoming discrimination in the labor market depends on the extent of discrimination in the hiring of women-owned accounting firms by those needing accounting services. Unfortunately, there has been little research on the performance and success of women business owners compared to men, and virtually no research on women-owned small accounting firms compared to those owned by men.

Lustgarten (1995) used Public Use Microdata Samples from the 1990 Population Census. Utilizing a regression methodology, Lustgarten controlled for a number of individual characteristics including the education, age, experience, amount of time dedicated to the business, marital status, and number of children. (Caring for children can divert time from self-employment and reduce earnings, particularly if the business is home-based.) The study found that self-employed women in broadly defined industrial sectors had lower average earnings than self-employed men. Lustgarten attributed some of the difference to credit market or consumer discrimination. One of the unfortunate limitations of this study was that it did not include characteristics of the lousiness such as the age or the size of the business - variables which might have influenced the statistical results.

The few additional studies of women-owned businesses were based on very small or unsystematic samples: Goffee and Scase (1983) studied twenty-three women proprietors; eighty-six women who owned businesses in Oklahoma returned Humphreys and McClung's (1981) questionnaires; Pellegrino and Reece (1982) randomly selected twenty women entrepreneurs; and Schwartz (1976) studied twenty women business owners. While these studies had acknowledged serious limitations, the researchers concluded in each that businesses owned and operated by women performed below "industry standards." None of these studies sought to explain why this differential exists.

Kallenberg anti Leicht (1991) contrasted the success of small businesses headed by men and by women over a three-year period. They examined businesses in the computer sales, food and drink, and health industries in south-central Indiana. They utilized a regression methodology which controlled for industry differences, business characteristics, and attributes of the owners, and found no differences in earnings between businesses headed by men and women. …

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