Evidence That Masters of Business Administration (Mba) Students Are Better Prepared for Corporate Strategic Planning Than Masters of Science in Accounting (Msa) Students

By Allen, Darryl E.; Idlebird, Jo Lacy | American Journal of Educational Studies, May 2012 | Go to article overview

Evidence That Masters of Business Administration (Mba) Students Are Better Prepared for Corporate Strategic Planning Than Masters of Science in Accounting (Msa) Students


Allen, Darryl E., Idlebird, Jo Lacy, American Journal of Educational Studies


ABSTRACT

Numerous surveys and discussions with CEOs, CFOs and other business leaders have verified that there is a common perception that accountants are better trained for successful careers in public accounting than for successful careers inside the corporate environment. This finding is disturbing because 90% of accounting professionals operate in corporate America. Corporations make the business case that cost cutting activities and global competitive pressures intensify the need for their newly hired accountants to "hit the ground running." Using a case study employed both in the MSA and the MBA advanced managerial accounting classes, this paper provides empirical evidence that students in the MBA program outperform their MSA counterparts when analyzing a routine capital budgeting project, indicating more developed analytical skills in the MBA group. This research contributes to the literature by exposing a significant gap between the initial preparedness of MSA students for corporate America's financial departments and that of MBA students. Since the skills lacked by MSA students are sought by corporate executives, educators should focus additional attention on adding to the curricula instruction and problem sets that result in the MSA student being better prepared for success in the corporate strategic planning environment.

Keywords: Accounting student preparation, Full (Life)-cycle accounting, Capital budgeting, Net Present Value, Internal Rate of Return

Introduction

A joint research project of the Institute of Management Accountants (IMA) and the Financial Executive Institute (FEI) identified the accounting knowledge and skill areas (AKSAs) that business executives considered important to success for entry-level accountants. They also identified the AKSAs where the executives found the entry-level accountant to be the most deficient. The IMA defined the difference between each AKSA's perceived value and the extent to which the entry-level accountants were judged to be deficient in that AKSA as a "preparation gap." The identified area with the largest perceived preparation gap was in the area of budgeting (IMA and FEI, 1994). The IMA followed up that study with a review of the changing role of the management accountant from scorekeepers to business partners. They identified the increasing need for accountants to have good long term strategic planning and analytical skills (IMA, 1999).

Albrecht and Sack (2000) under the auspices of the AAA, AICPA and the IMA surveyed accounting educators and accounting practitioners. Their survey indicated that only about 6% of them would get a Master's of Science in Accounting (MSA) degree if they could start their college careers over. These educators and practitioners indicated that they would overwhelmingly seek a Masters in Information Systems or an MBA. This result indicates that practitioners, 90% of whom do not work in public accounting, would broaden their skills rather than concentrate in Master's level accounting. Finally, in the CFO journal, a practitioner journal for CFOs, McCann finds that major CFO recruiting firms indicated that the pendulum that swung to CPAs for CFO hires during the Sarbanes-Oxley implementation, is swinging back to MBAs with broader education and finance perspectives in 2007 and early 2008 (2008).

In summary, the perception that accounting students are not as well prepared for success in Corporate America has been surveyed and discussed for at least the last 35 years. This preparation gap is especially pertinent to the companies who employ entry level accountants and expect them to be top performers in a short period of time.

This study provides empirical evidence that, at least initially, the MBA students are better prepared than the MSA students for participating in the capital budgeting decision making. Employees viewed as having the better analytical skills by management will likely have better career opportunities in the strategic planning groups. …

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