SYNOPSIS The market for professional accountants has changed a great deal in recent years. Accounting enrollments have declined, and accounting firms have had difficulty recruiting entry-level staff with the appropriate skill sets. Both of these trends can be traced to changes in the demographics and expectations of university-age students as accounting competes for students with other professions. Some commentators blame this on the introduction of the 150-Hour Rule for accounting education, but there are numerous drivers that may be affecting the market for accounting labor over the long term: (1) the nature of the work/life experience in accounting, (2) the changing economics of accounting firms, (3) the challenges of refreshing the curriculum of traditional accounting programs, (4) the impact of rapidly changing technology, and (5) the influence of regulation on the entry of new students to accounting. I end with a discussion of some ideas for the future of the profession. JEL Classifications: M4.

SYNOPSIS Prior academic studies have investigated client- or office-level non-audit services (NAS) and found either positive effects through knowledge spillover or negative effects due to independence impairment or distraction. This study complements existing research by examining whether the effects of office-level and client-level NAS on audit quality vary with an audit office’s NAS focus. Specifically, we find a nonlinear association between office-level NAS provision and audit quality, with client misstatement rates lowest when the office provides moderate levels of NAS. Tax-related NAS drives these results. Further analysis reveals that the office-level focus on NAS affects the association between client-level NAS purchases and audit quality. This study enhances our understanding of the office-level and client-level dynamics of NAS provision to audit clients, offering regulators and practitioners relevant insights as they navigate this issue. Data Availability: All data sources are noted in the manuscript. JEL Classifications: M4; M41; M42.

SYNOPSIS To prevent firms from hiding losses and risks in unconsolidated subsidiaries, standard setters have progressively broadened the scope of consolidation, which results in greater managerial discretion in adding entities for consolidation. We examine whether state-owned enterprises (SOEs) with higher state ownership, hence stronger empire-building incentives, are more inclined to exploit this discretion to consolidate additional investees. China’s mixed-ownership reform, which introduces nonstate blockholders and reduces state ownership, provides an ideal setting. We find that SOEs are less likely to exploit the discretion to consolidate their investees after the reform. The decline is sharper when accounting standards allow greater discretion, when consolidation yields larger asset increases, and when the government places greater emphasis on expansion. Further analyses reveal that consolidation accounting generates real benefits, which diminish after the reform. Our study provides novel evidence on aggressive consolidation under principle-based accounting standards and offers insights for standard setters refining the consolidation boundary. Data Availability: The data that support the findings of this study are publicly available and can be accessed upon request. JEL Classifications: M41.

SYNOPSIS We study how the abrupt transition to remote work during COVID-19 impacted the work-life balance of audit engagement leaders (i.e., managers and above) by examining audit-employee reviews on Glassdoor.com. We find general declines in auditors’ work-life balance, with engagement leaders experiencing the greatest decline. The disproportionate effect on engagement leaders’ work-life balance is concentrated in offices less equipped for transitioning to a remote work environment (i.e., non-Big 4 offices and offices with auditing clients with fewer foreign operations) and in offices serving more financially distressed clients. However, engagement leaders’ overall satisfaction and turnover intentions remain unchanged. Our findings offer insights into how remote work impacts auditors by highlighting the specific challenges faced by audit engagement leaders and provide a lens for viewing firms’ efforts to institute return-to-work policies. We provide suggestions for how accounting firms can respond to the decline in engagement leaders’ work-life balance. Data Availability: Data are available on Glassdoor.com. JEL Classifications: J63; J81; M12; M41; M42.

SYNOPSIS Over the past decade, there has been a substantial decline in the number of accounting majors and newly minted U.S. CPAs. In response, the AICPA established the National Pipeline Advisory Group (NPAG), with a mission to “increase the number of people who choose a career in accounting.” We evaluate the analysis and recommendations in the NPAG’s final report, with a focus on understanding the demand and supply factors driving compensation, college major choice, and occupation choice. Although we share many of the NPAG’s concerns and observations, we question its characterization of declining entrants as exclusively a supply phenomenon and conclude that its recommendations would have only marginal effects on supply. We propose for discussion four alternatives for reforming entry to public accounting, each with the goal of reducing the cost of entry without compromising quality and, in doing so, increasing economic welfare. JEL Classifications: J24; J44; M40, M41; M42; K2; L51.

SYNOPSIS High-ability managers’ performance track records and “integrity” culture foster capital providers’ trust and reduce career risks, allowing them to set the firm’s financial reporting policies. Employing this discretion, high-ability managers are likely to report less conditionally conservative earnings. Data from S&P 1500 U.S. firms between 1996 and 2017 support this conjecture. Additional analysis continues to suggest that high-ability managers lower conditional accounting conservatism under limited boundary conditions. We also document that some high-ability managers misuse their financial reporting discretion opportunistically. Despite this, using a two-stage method, we show that our proposed theoretical mechanism—firms with a stronger corporate integrity culture, which promotes trust—enables high-ability managers to report less conditionally conservatively. This study contributes to the research on accounting conservatism and managerial behavior, cautioning capital providers against placing excessive trust in high-ability managers, as in some cases, that trust has been found to be misplaced. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: D22; D82; K42; M41.

SYNOPSIS Carbon risk management plays a crucial role in global environmental development, increasing the demand from environmentally conscious investors and stakeholders for carbon disclosure and control. In parallel with the U.S. Securities and Exchange Commission’s (SEC) release of climate rules in 2024 for enhanced carbon disclosure, this study investigates the effect of voluntary carbon disclosure on analyst forecast accuracy. Using a sample of S&P 500 firms from 2009 to 2020, we find that high-quality carbon disclosure and performance is positively associated with earnings forecast accuracy. Superior disclosures reduce firm-level uncertainties and result in more accurate forecasts. The positive effect is strong in firms that voluntarily disclose climate risks because analysts better comprehend the financial implications of firms’ integrated climate-control strategies. This study contributes to environmental, social, and governance (ESG) disclosure practices and offers implications through specific carbon disclosures. Our evidence supports the SEC in validating its move toward enhanced reporting guidelines. Data Availability: The data for this study are collected from subscription-based databases like Compustat-Capital IQ, I/B/E/S, and Bloomberg and manually from various publicly available sources identified. JEL Classifications: C36; G32; M14; M41; M48; Q51.

SYNOPSIS We examine how well machine learning algorithms can leverage historical pricing data to reduce the initial bargaining gap between sellers and buyers, aiming to improve personalized price effectiveness for traditional offline firms. In collaboration with a Chinese wholesaler, we construct a pricing model and apply it to real transactions. We show that under the model’s prices, the acceptance rate of initial pricing among buyers increases by 9.91 percent, and the adjustment frequency of initial pricing decreases by 23.52 percent, compared to prices set by traditional salespeople. Furthermore, interviews with practitioners reveal the model’s ability to streamline pricing workflows for salespeople and unlock new revenue potential for the company. Altogether, our findings demonstrate that machine learning can help traditional companies make better-personalized pricing decisions by narrowing the initial bargaining gap and concluding transactions more quickly.

SYNOPSIS ASC 842, which requires balance sheet recognition of right-of-use (ROU) lease assets, resulted in a large increase in reported assets since 2019, thus impairing the time-series consistency of metrics that use assets (e.g., asset turnover). This paper shows that ROU assets can be estimated quite precisely using lease disclosure. Adding the estimated ROU asset for pre-ASC 842 observations substantially improves the ability of operating assets to explain sales. It also increases the ability of growth in operating assets to predict sales growth and explain analysts’ revenue growth forecasts. Similar results are obtained when examining the reported ROU asset (since 2019) instead of the estimated one. These findings indicate that (1) by requiring the recognition of ROU assets, ASC 842 has improved the informativeness of reported assets about the sales-generating ability of the firm; and (2) when using pre-ASC 842 information, adding an estimate of the ROU asset is warranted. Data Availability: All data are available from sources identified in the text. JEL Classifications: G12; G17; G31; G32; M41.