Coffee on the Third Floor: Mark Maffett on Hidden Ubiquity of Accounting

Araba Nti, '17

Araba Nti, '17

Why did the accountant stare at his glass of orange juice for three hours? After spending a good 45 minutes talking to Mark Maffett about accounting, his work, and settling in Hyde Park after migrating from the South, it was clear that accountant jokes need not apply. Joining Booth faculty in 2012, Mark Maffett is an Assistant Professor of Accounting and Centel Foundation/Robert P. Reuss Faculty Scholar at Booth. Maffett may be best known among Booth students for his financial accounting intro course. But for those who are interested in pursuing a career in consulting, there may be an opportunity to have a little more Maffett in your life as he prepares to teach a new course with a heavy emphasis on financial accounting applied in a consulting setting (read on to find out more).

For those who shudder at the thought of devoting a lifetime to thinking about debits and credits, Maffett makes it clear that the interesting and more powerful part of accounting lies elsewhere: “The overlap between what we teach and what we research is not as direct as some of the other disciplines. A lot of what we research is on more of a big picture level than the nuances—like accounting rules—that we teach in classes. More generally, our focus is on how the quality of a firm’s disclosure environment affects various capital market outcomes.”

Mark Maffett, Assistant Professor of Accounting and Centel Foundation/Robert P. Reuss Faculty Scholar at Booth

Mark Maffett, Assistant Professor of Accounting and Centel Foundation/Robert P. Reuss Faculty Scholar at Booth

“A paper that has had a lot of influence on the way that we do things and the questions that we ask is one by two economists, [Ginger Zhe] Jin and [Phillip] Leslie, that look at the effect of the disclosure of hygiene scorecards in restaurants. They were able to get ER admissions information from where they did the study so that they could look at the incidence of foodborne illness and other sickness, then tie it back to these disclosures of the scorecards and how that changed what restaurants people decide to go to. This paper seems as far removed from accounting as you can get, but the conceptual mechanisms that underlie the effects of going from having to go to the courthouse to flip through the files for hygiene scores to explicitly posting the score where everyone can see it when they walk through the door is very related to the type of questions we think about.”

Applying this to his own work: “I’m looking at whether the provision in the Dodd Frank bill requiring firms to disclose mine safety information in the financial statement had any real effects. Did it decrease mining related accidents and injuries? If you increase safety it’s going to be costly from the mine’s perspective, so did it lower productivity? I also find that there are very real effects on demand for these companies. For example, if you’re a mutual fund and don’t want to be exposed to the possibility that a company in your portfolio could have a catastrophic mining accident.”

As consumers of financial reporting, Maffett’s message for Booth students “be aware of the context in which you are receiving a piece of financial information and how that is shaped by the interests of the parties that are disclosing that piece of information—the levers they have to turn. Financial information is shaped by a particular party’s incentives in terms of what they disclose to you.”

Maffett recognizes a need for an advanced accounting course that is more reflective of the changing career aspirations of Booth students entering functions that require a solid grasp of accounting: “a lot of the jobs that students are taking are changing. The higher proportion in consulting, lends itself to a little more of a broad of a focus.” Aware that students who have interviewed for consulting have found that interviewers expect more accounting knowledge that what is taught in the financial accounting intro course, Maffett envisions his course to be more advanced than the intro course but more transaction focused than FSA.

Aspiring consultants, help Prof. Mark Maffett help you be more prepared for your internship and full time job. Email him at (Mark.Maffett@chicagobooth.edu) or stop by his office (Room 437) to chat.

Araba is a first year at Booth who recently discovered that there’s life above the 2nd floor of Harper Center.