Occupational Licensing and Accountant Quality: Evidence from the 150-Hour Rule

Journal of Accounting Research, Volume 60, Issue 1, 2022

Posted: 2 May 2022

See all articles by John Manuel Barrios

John Manuel Barrios

Washington University in St. Louis - John M. Olin Business School; National Bureau of Economic Research

Multiple version iconThere are 3 versions of this paper

Date Written: March 1, 2022

Abstract

I examine the effects of occupational licensing on the quality of certified public accountants (CPAs). I exploit the staggered adoption of the 150-hour rule, which increases the educational requirements for a CPA license. The analysis shows that the rule decreases the number of entrants into the profession, reducing both low- and high-quality candidates. Labor market proxies for quality find no difference between 150-hour rule CPAs and the rest. Moreover, rule CPAs exit public accounting at similar rates and have comparable writing quality to their nonrule counterparts. Overall, these findings are consistent with the theoretical argument that increases in licensing requirements restrict the supply of entrants and do little to improve quality in the labor market.

Keywords: CPA licensure; hazard rate model; human capital; labor market outcomes; occupational licensure; screening; the 150-hour rule

JEL Classification: D45, I21, J2, K2, L51, M4

Suggested Citation

Barrios, John Manuel, Occupational Licensing and Accountant Quality: Evidence from the 150-Hour Rule (March 1, 2022). Journal of Accounting Research, Volume 60, Issue 1, 2022, Available at SSRN: https://ssrn.com/abstract=4072832

John Manuel Barrios (Contact Author)

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States

National Bureau of Economic Research ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
1,035
PlumX Metrics