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An empirical study of factors


affecting accounting students'
career choice in New Zealand
Kamran Ahmed , Kazi Feroz Alam & Manzurul Alam
Version of record first published: 05 Oct 2010.

To cite this article: Kamran Ahmed , Kazi Feroz Alam & Manzurul Alam (1997):
An empirical study of factors affecting accounting students' career choice in New
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Accounting Education 6 (4), 325335 (1997)

An empirical study of factors affecting


accounting students career choice in
New Zealand
K AM RA N A HM E D 1 , KA Z I F ER O Z A L AM 2 and M AN Z U RU L AL A M 3
1
University of New England, Australia, 2Massey University, New Zealand and 3University of Waikato, New
Zealand

Received: June 1996


Revised: December 1996
Accepted: January 1997
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Abstract
This study examines the in uence of intrinsic factors; nancial and job-related factors; other factors
such as parent and peer in uence and work experience; exposure to high school accounting; and the
students perceived bene tcost ratio to being a chartered accountant, on whether accounting
students choose to pursue a chartered accountancy (CA) career or a non-accounting career. Based on
a survey of 295 students from ve universities in New Zealand, the results show that the students
who intend to pursue a CA career place signi cantly greater importance on nancial and job-related
factors and perceived bene tcost ratio than those who choose a non-accounting career. Intrinsic
factors, other factors and exposure to high school accounting have no signi cant in uence on the
decision whether to select a CA career. A discriminant analysis revealed that nancial and job-
related factors have the highest explanatory power differentiating the two groups, followed by the
students perception of bene ts and costs associated with a CA career. The results have important
implications for recruitment into the accounting profession in New Zealand.
Keywords: Career choice; accounting students; nancial and market factors; intrinsic factors; New
Zealand.

Introduction
In recent years, practising accounting rms in New Zealand have been facing staff
shortages and are nding it dif cult to meet the demand for increased accounting services
from existing and new clients arising from expanded economic activities (The Institute of
Chartered Accountants of New Zealand (ICANZ), 1993). This situation is not unique to
New Zealand; other countries such as the USA, Canada and Australia are also losing bright
accounting graduates to other professions (Austin et al., 1986; Wallace, 1987; Luscombe,
1988). Several studies in the USA, Canada and Australia have investigated the factors that
in uence accounting students career choice (for example, Carpenter and Strawser, 1970;
Zikmund et al., 1977; Paolillo and Estes, 1982; Haswell and Holmes, 1988; Gul et al.,
1989; Felton et al., 1994 and 1995). However, in New Zealand, very limited research has
been undertaken on the employment choice issue and as such, it has remained a

* Address for correspondence: Dr. Kamran Ahmed, Department of Accounting and Financial Management,
University of New England, Armidale, NSW 2351, Australia.

09639284 1997 Routledge


326 Ahmed et al.

comparatively neglected area in the eld of accounting education and the profession in this
country.
The purpose of the present study is to address this issue by empirically examining the
factors that in uence the career choice of accounting students regarding whether to pursue
a career in chartered accountancy (CA) or to select a non-accounting career. 1 In 1994,
Felton, Buhr and Northey undertook a comprehensive study of 897 business students in
eight Canadian universities. They grouped 19 items into ve factors such as intrinsic
rewards, good initial earnings, good long-term earnings, job-market considerations, and
whether students have had accounting in high school and examined how these factors
in uenced the decision to select a career in Chartered Accountancy (CA). The present
study is primarily based on Felton et al. (1994). However, a few additional variables are
included because these were examined in prior studies in Australia and New Zealand (Gul
et al., 1989; Linden, 1987). As suggested by Stewart (1981) these variables are factorized
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in order to form a coherent sub-group of items that convey the same underlying construct
based on respondents perceptions. This study also differs from previous studies in New
Zealand in several ways. Taylor and Dixon (1979) examined students attitudes and
perceptions towards accountants and the accounting profession, while Lindens (1987)
research assessed the personality types of male and female accounting students and how
they differed in assigning relative importance to some selected factors. Neither study
examined the factors that can in uence an accounting student in choosing whether or not
to pursue a CA career. In addition, both studies suffer from small sample bias resulting
from the use of data from only one university.
The present study uses a large sample and undertakes both univariate and multivariate
analyses to identify the signi cant factors affecting the career decisions of third-year
accounting students of ve universities in New Zealand. The results of the study will be
useful to employers by providing information on prospective graduates and identifying
factors they consider in choosing careers.
The paper is organized as follows. Following the introduction, the development of
hypotheses is described. The third section discusses data collection and research method
and this is followed by presentation of results. In the nal section, conclusions,
implications of the ndings and major limitations are outlined.

Hypotheses development
Several prior studies, employing a variety of different factors, have examined the criteria
used by accountants in selecting their career. The hypotheses developed in the present
study are primarily based on Felton et al. (1994) and other previous research on
employment choice such as Haswell and Holmes (1988) and Gul et al. (1989). Hypotheses
tested intrinsic factors, nancial and job market factors, perceived bene tcost ratio of a
CA career, other factors, and the students exposure to high school accounting as factors
in uencing the CA career choice. Intrinsic factors are related to satisfaction derived from
a job which provides the opportunity to be creative, autonomy, and an intellectually
challenging and dynamic environment. These are different from nancial remuneration

1
For the purpose of this study, students wishing to take a career in investment banking, general banking, law,
marketing and management without obtaining professional accounting quali cations from the Institute of
Chartered Accountants of New Zealand are considered to be non-accountants .
Career choice in New Zealand 327

and market-related factors which are extrinsic to the nature of the job itself. Financial and
market-related factors are associated with job availability and security, career prospects
and exibility, and earnings. The bene tcost ratio evaluates how a student perceives the
rewards (bene ts) and the penalties (costs) of a CA career. Such bene ts, according to
Felton et al. (1994), include challenging work in the rst few years, acting as trustworthy
and dynamic business advisers, and the prospect of becoming the chief executive of a large
company, while costs may include dif culty of qualifying, little relaxation and low
earnings in the initial few years, and the negative image of accountants. Other factors
include parental and peer in uence, previous work experience, high school exposure to
accounting and university grades in accounting courses.
Those intending to become CAs may attach importance to intrinsic factors differently
from those who would pursue a non-accounting career. Prior studies have showed mixed
results. For example, Paolillo and Estes (1982), Haswell and Holmes (1988), and Gul et al.
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(1989) have noted that accountancy students attach lower importance to intrinsic factors in
career decisions. In contrast, Linden (1987), Horowitz and Riley (1990) and Felton et al.
(1994) have found intrinsic factors to be very important in career decisions made by
accounting students. Linden (1987) found that the need for achievement and an interesting
job are important motivating factors for choosing accounting as a career in New Zealand.
Therefore, based on the prior ndings, the following null hypothesis has been
developed:
H1: There is no difference between the importance placed on intrinsic factors by
those accounting students who have chosen a CA career and those who have
chosen a non-accounting career.
Financial remuneration, job availability, job security and opportunities for advancement
have been found to be important factors in career choice decision (Paolillo and Estes,
1982; Cangelosi et al., 1985; Kochanek and Norgaard, 1985; Reha and Lu, 1985;
Shivaswamy and Hanks, 1985; Linden, 1987; Haswell and Holmes, 1988; Gul et al., 1989;
Horowitz and Riley, 1990, and Felton et al., 1994). Felton et al. (1994) combined all
market-related factors and found that on average these factors were assigned signi cantly
higher weights by students who have chosen a career in chartered accounting. Based on
these ndings, the following null hypothesis has been proposed:
H2: There is no difference between the importance placed on nancial and job
market factors by those accounting students who have chosen a CA career
and those who have chosen a non-accounting career.
Parental and peer in uence, previous work experience and performance in accounting
courses in university have been included in prior decision studies (Paolillo and Estes,
1982; Silverstone and Williams, 1979; and Gul et al., 1989). Silverstone and Williams
(1979) have found that 26% of female chartered accountants in England and Wales
considered parental in uence to be a factor in career choice. Accordingly, these factors
have been included and classi ed as other factors to be tested in the context of New
Zealand. For formal testing the following null hypothesis has been developed:
H3: There is no difference between the importance placed on other factors by
those accounting students who have chosen a CA career and those who have
chosen a non-accounting career.
328 Ahmed et al.

Several prior studies have examined the perceptions associated with accounting as a
profession both by accountants and non-accountants and report, as expected, that
accountants generally hold a positive view on the accounting profession, while non-
accountants view the profession more negatively (Aranya et al. 1979; Taylor and Dixon,
1979; Oswick et al., 1994). While these studies identi ed both positive and negative
attitudes towards the accounting profession, Felton et al., (1994), following Ekehammer
(1977) and Wheeler (1983), applied a bene tcost ratio approach. The ratio is computed
by dividing the average weights for the perceived bene ts by the average weights for
perceived costs of choosing a CA career. Felton et al. (1994) have found that the ratio is
a signi cant determinant of career choice decision among business students in Canadian
universities. The present study, employing the same approach, tests the following
hypothesis:
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H4: There is no difference between the importance placed on bene tcost ratio
by those accounting students who have chosen a CA career and those who
have chosen a non-accounting career.
The nal hypothesis relates to the in uence of exposure to high school accounting on
accounting students career intentions. According to Felton et al. (1994), a positive
relationship exists between choosing a career in chartered accountancy and taking
accounting at high school. Their ndings suggest that a signi cantly greater proportion of
students who have taken accounting in high school intend to pursue a career in chartered
accountancy. Therefore, the last hypothesis to be tested is as follows:
H5: The decision to pursue a career in chartered accounting is not related to
whether or not an accounting student has taken a course in accounting at high
school.

Data collection and research method


To test the above hypotheses, a questionnaire survey was administered in May and June
1995 to nal (3rd) year students in the accounting departments of ve universities in New
Zealand. Ideally, new graduates seeking employment should have been included for this
type of study. This study used nal year students as a proxy for new graduates for two
important reasons. First, most of the nal year students are likely to have made their career
decisions by this time and, second, it is costly and dif cult to administer a questionnaire
once they are dispersed in the workforce (Haswell and Holmes, 1988). A questionnaire
consisting of 35 questions was administered in the lecture. It contained eight questions for
which students were asked to put a tick mark and 27 questions for each of which they were
asked to assign a number on a ve-point Likert scale.
In total 332 completed questionnaires were received of which 295 are used for analysis. 2
This represents a response rate between 45% and 50% of the total enrolment in the
respective classes. Of the 298 respondents, 241 are classi ed as CAs (having chosen a
career in CA) and 54 are categorized as non-accountants (having chosen a non-accounting
2
The response from the ve universities are Lincoln University (65), Massey University (30), Otago University
(82), Victoria University of Wellington (93) and University of Waikato (62). Thirty-seven questionnaires could
not be used because these were completed by overseas students who would not seek employment in New
Zealand and by those who were undecided.
Career choice in New Zealand 329

career). Both univariate and multivariate tests are undertaken to analyse the data and to test
the hypotheses set out in the preceding section.

Factor analysis
To determine the extent to which the questions correlate with other measures designed to
measure the same thing (construct validity), the 27 questionnaire items that required
assigning weights on a ve-point scale were factor analysed (Stewart, 1981). Factor
analysis is also necessary to discover which variables form coherent sub-sets that are
relatively independent of another (Eisenbeis, 1977; Dillon, 1979). The initial principal
factor matrix is rotated using the oblimin method because the factors are correlated in
reality and this method makes allowance for this (Norusis, 1990). Five factors with eigen
values equal to or greater than one are extracted with a total explained variance of 67.8%
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and a KMO adequacy value of 0.73. Table 1 shows ve factors on question items with
loadings greater than 0.40. The determinants of good initial salary, self employment
prospects, a structured career, accountants have varied academic backgrounds and grades
in accounting at the university are not reported here because their factor loadings are
, 0.40 (Chenhall and Morris, 1986). Each factor corresponds to the a priori classi cation
discussed in the hypotheses development section which is generally consistent with Felton
et al. (1994) predetermined sub-grouping. Cronbachs alpha statistic for each factor and all
questions indicate that data reliability is adequate (Nunnally, 1978). 3
Arithmetic averages are then calculated for each factor by taking the raw score for each
questionnaire item forming factors with loadings greater than 0.40 (Chenhall and Morris,
1986). While the average scores for nancial and job market factors, intrinsic factors and
other factors are used for further analysis, the ratio of perceived bene ts to costs is
obtained by dividing the average score of bene ts by the average score of costs. A t-
statistic is used to determine whether the CA group mean is signi cantly different from
that of the non-accountant group for each hypothesis. The nal hypothesis examines
whether exposure to high school accounting has any in uence in selecting a career in
chartered accountancy. This variable is dichotomous and the difference between the
chartered accountant and the non-accountant groups is tested using a chi-square
statistic.
Further, a multivariate discriminant model is developed to determine the linear
combination of factors that best distinguishes students who choose a CA career from
students who select a non-accounting career, and to assess the relative explanatory power
of each factor in career decisions of the students. The average score for each factor is
obtained and is introduced into the model directly. The formulation and speci cation of the
model are presented below:
Career 5 a 1 b 1 INF 1 b 2 FMKF 1 b 3 OTF 1 b 4 BC/CO 1 b 5 HSA 1 e
where Career 5 chartered accountant or non-accountant (1 5 yes, 0 5 no); INF 5 intrinsic
factors; FMKF 5 nancial and job market factors; OTF 5 other factors; BE/CO 5 per-
ceived bene tcost ratio; HSA 5 high school accounting (1 5 yes, 0 5 no) and e 5 error
term.

3
Cronbach alpha statistics of 0.69 for intrinsic factors, 0.72 for nancial and job market factors, 0.61 for other
factors, 0.63 for perceived bene ts, 0.44 for perceived costs and 0.75 for all 27 questions were obtained .
330 Ahmed et al.

Table 1. Factor loadings on determinants of career choice of accounting students

Factor loadings
Factor 1 2 3 4 5
Intrinsic factors
I would like a job:-
That challenges me intellectually 0.643
In a dynamic environment 0.782
Where creativity is encouraged 0.778
That allows independence 0.445
That gives standing in the community 0.477
Financial and job market considerations
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Job availability 0.696


Job security 0.727
Good long-term salary 0.648
Flexibility of career option 0.554
Promotion and advancement opportunities 0.596
Other factors
Parental in uence 0.744
Peer in uence 0.826
Previous work experience 0.516
Secondary school grades in accounting 0.514
Promotional material 0.582
Perceived bene ts
There is challenge to the work in the
rst few years 0.615
One is a dynamic adviser to business 0.816
Accountants are trusted business advisers 0.800
May become chief executive of large business 0.443
Perceived costs
There is no time to relax in the
rst few years 0.504
There are too many hurdles to qualify 0.561
Earnings of accountants in the rst
few years are relatively low 0.582
Accountants have a dull image 0.601
Percentage of variance 20.5 15.4 12.5 10.9 8.5

Results
Univariate tests results
The results of the univariate tests are presented in Table 2. The results show that the
average score (x) of the ve intrinsic factors is 3.829 (maximum possible score 5) for the
students who choose a CA career and 3.741 (maximum possible score 5) for non-
accountant students. The t-test shows that the two means are not signi cantly different at
the 5% level. This suggests that students who have chosen a CA career do not consider
Career choice in New Zealand 331

Table 2. Univariate tests results of the factors in uencing career decision

CA Non-acc. CA Non-acc. Sig.


Hypothesis (x) (x) St. dev St. dev t-value level
H1: Intrinsic factors 3.829 3.741 0.618 0.610 0.95 0.34
H2: Financial and job market factors 4.283 4.067 0.536 0.630 2.60 0.01
H3: Other factors 2.553 2.426 0.774 0.633 1.08 0.28
H4: Bene tcost ratio 1.045 0.976 0.256 0.337 1.69 0.09
H5: HS accounting 0.774 0.759 0.419 0.432 0.23* 0.82
* chi-square value, signi cant at the 5% level, signi cant at the 10% level.

intrinsic factors to be signi cantly more important than the students who would pursue a
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non-accounting career. This result is not consistent with Felton et al. (1994), who found
that business students who have chosen a career in CA attach lower importance on intrinsic
factors. The difference in results could be due to the different institutional setting and the
economic size of the two countries affecting employment.
The average score of nancial and market factors for the CA group is 4.28 and is 4.07
for the non-accountant group. The t-test statistic indicates that the difference between these
two means is signi cant at the 5% (p 5 , 0.02) level. On that basis, the null hypothesis of
no difference is rejected and it is concluded that accounting students who wish to become
CAs place signi cantly more importance on nancial and job market factors than those
who would not. For the other factors there is no signi cant difference in importance of
these factors between the two groups. It can be concluded that accounting students who
wish to take up a CA career do not consider other factors to be signi cantly more
important than those who would take up a non-accounting career. Table 2 also shows that
the average bene tcost ratio of 1.045 for students who choose a CA career and 0.976 for
students who choose a non-accounting career. Felton et al. (1995: 9) noted that a higher
bene tcost ratio for CA students does not necessarily mean that bene ts are always
higher than those of non-accountant students or that costs are lower. For example, a higher
bene tcost ratio for a CA student is possible even with lower bene ts than those of a non-
accountant, provided costs are suf ciently lower than those of a non-accountant. The test
indicates that the mean difference between the two groups is signi cant at the 10% level
which suggests that, by considering this factor alone, the perceived bene t to cost ratio is
not independent of whether an accounting student would wish to be a chartered accountant
or not. The last hypothesis is tested by using chi-square, which is not signi cant at the 5%
level. This means that whether or not an accounting student has taken a course in
accounting at high school has no signi cant impact on the decision to select a career in
chartered accountancy.

Discriminant analysis results

Table 3 presents the results of the multivariate discriminant analysis using career decision
(CA and non-accountants) as the dependent variable and the ve factors, explained earlier,
as the explanatory variables. The results are consistent with univariate results. Only
nancial and market factors are signi cantly associated (p # 0.05) with career decisions of
332 Ahmed et al.

Table 3. Discriminant analysis results of career choice decision

Discriminant
Stand. discriminant Structure ratio coeff.
Variable function coef cient (1) coef cient (2) (3 5 1 3 2)a Sig. level
INF 0.121 0.368 0.04 0.32
FMKF 0.695 0.802 0.56 0.03
OTF 0.156 0.282 0.04 0.44
BE/CO 0.529 0.606 0.32 0.10
HS 0.211 0.157 0.04 0.67
a
Proportion of discrimination between careers (chartered accounting or non-accounting )
explained by the independent variables. Signi cant at the 5% level, signi cant at the
10% level.
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accounting students.4 Financial and market factors are found to be important determinants
in other employment intention and career choice studies in Australia, Canada and the USA
(Paolillo and Estes, 1982; Haswell and Holmes, 1988; Gul et al., 1989; and Felton et al.,
1994). After controlling for the effects of the other four independent variables, the
multivariate model shows that the bene tcost ratio is signi cant at the 10% level, which
is consistent with Felton et al. (1994). This result suggests that prospective CAs see that
the bene ts of becoming professional accountants are greater than the associated costs.
A data-analytic interpretation method is used to interpret the discriminatory power of
each of the explanatory variables. Using this method, the standardized discriminant
function coef cient is multiplied by the structure coef cient to obtain a value which is the
discriminant ratio coef cient (DRC), and which provides the relative proportion of
discrimination explained by the variable (the sum of DRCs total is 1.0). The highest DRC
for nancial and job market factors is 55.9%, which means that these factors have
explained about 56% of the total discrimination between the two groups. This is followed
by perceived bene t to cost ratio of 32.1%, suggesting that nearly one-third of the total
variation is explained by this factor.5 High school accounting, other factors and intrinsic
factors each have the same, but very low, explanatory power of about 4.5%.
Multicollinearity has not been a problem since the variance in ation factor (VIF) for
explanatory variables was between 1.01 and 1.18. Neter et al. (1983) suggest that a VIF
greater than ten should be considered a serious indication of multicollinearity. However,
the models correct classi cation of 61% is lower than that of Felton et al. (1994) which
has a correct prediction rate of 69.3%. Table 4 shows that the group of students interested
in a CA career was 61.3% correctly classi ed, while correct classi cation for students not
interested in accounting was 58.8%.

4
In order to avoid the arbitrary cut-off point of 0.40 loadings, factor scores for the ve factors and HSA
questionnaire response were directly entered into a discriminant model using SPSS. The results are, in general,
consistent with what is reported here except that the signi cance level for all hypothesised variables decreased .
However, nancial and market considerations remained signi cant at the 5% level (p 5 0.04, instead of reported
p 5 0.03). The model correctly classi ed 62.6% of career choice.
5
We also replicated Felton et al. (1994) model using the same variables. The results are, in general, consistent
with what has been reported in the paper, which suggests that job market, long-term earnings and bene tcost
ratio are signi cantly associated with career decisions of accounting students.
Career choice in New Zealand 333

Table 4. Classi cation results of sample

Group Discriminant score for group means


Interested in chartered accounting 0.074
Not interested in accounting 0.347
Classi cation matrix
Predicted group
Interested Not interested
Actual group Observation in CA in accounting
Interested in CA 238 146 (61.3%) 92 (38.7%)
Not interested in accounting 51 21 (41.2%) 30 (58.8%)
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Conclusions
The objective of this study was to test some factors that might in uence the decisions of
accounting students to choose a career in chartered accountancy. The ndings clearly
indicate that accounting students in New Zealand who intend to select a career in chartered
accountancy give signi cantly higher priority to nancial and market factors than those
who have chosen a non-accounting career. Similarly, not surprisingly, they perceive the
bene ts of becoming a chartered accountant to be greater than the associated costs.
Further, the results indicate that intrinsic factors, other factors and exposure to accounting
at high school have no signi cant in uence on this career decision. The multiple
discriminant model reveals that job market and nancial considerations have the highest
discriminatory power, followed by the bene tcost ratio associated with pursuing a career
in CA.
The results obtained here have implications for the accounting profession in New
Zealand. The perception that the prospective chartered accountants value long-term
remuneration in addition to promotion and exibility provides valuable feedback for the
recruitment strategy of practising chartered accounting rms facing staff shortages.
Professional accounting rms and other organizations employing CAs should provide
long-term nancial remuneration and job security, in addition to ensuring exibility and
advancement in career in recruiting accounting graduates wishing to take a career in
chartered accountancy.
This study also showed that students choosing a non-accounting career view the
accounting profession as dull and boring since on average the bene tcost ratio is found
to be lower than that of the CA group. In order to attract bright students from this group
into the accounting profession, the ICANZ and practising accounting rms should
intensify their efforts to improve the professions negative image held by non-accounting
groups. Although the ICANZ has already started an awareness campaign in connection
with its new admission policies, we suggest that the programme might also focus on how
the bene ts of a CA career, such as the challenging nature of the job, long-term prospects
and trustworthiness, outweigh its negative aspects/image, such as hurdles to qualifying,
boredom and the non-relaxing nature of the job. This might be done by educating students
about career opportunities, distributions of brochures and use of alumni to present
seminars on a career in CA. Big CA rms could conduct job information meetings, help
third year students throughout the hiring process and conduct career fairs. Other means of
334 Ahmed et al.

support to attract bright students to select a career in CA could include providing


scholarships, extending ICANZs current internship programme and encouraging practis-
ing CA rms to award prizes to students for obtaining good grades in accounting courses.
It could be helpful if second year accounting students were also encouraged to talk to
recruiting staff about career prospects and bene ts of a CA career.
However, the results of the study should be interpreted in the light of several limitations.
First, the use of third year students as proxies for actual graduates may have reduced
external validity. Future research should focus on actual graduates seeking employment in
New Zealand. Second, students who have double career interests were disadvantaged by
being forced to choose one career option from a list of career options. Finally, the study
sought the career intention of the students of accounting departments and the opinions of
other business students were not elicited. Another extension of this study would be to
include them in order to investigate their career choices and their attitude towards a
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professional accounting career.

Acknowledgements
We are grateful to Roger Willet, David Goodwin, Stephen Keef, Bob Cavana and two
anonymous reviewers for their help and suggestions. Financial assistance from the Faculty
of Commerce, Victoria University of Wellington is gratefully acknowledged.

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