If accounting majors easily get Big 4 jobs, yet you want to work in IB, why would an accounting major help you, according to your logic?
Well, I've heard that some people land IB positions with an MBA. Does that make any sense? I'm just saying that majoring in Accounting gives you job security, if you ever wanted to fall back from IB, or if you don't get that IB position you were chasing after. A finance degree wouldn't do the same in my opinion.
Singh_chera:
Well, I've heard that some people land IB positions with an MBA. Does that make any sense? I'm just saying that majoring in Accounting gives you job security, if you ever wanted to fall back from IB, or if you don't get that IB position you were chasing after. A finance degree wouldn't do the same in my opinion.
I work in IB and graduated quite recently - majored in finance after switching from accounting, been reflecting on this - major in accounting. No one will look negatively upon it relative to majoring in finance, and you get the security + easier classes, higher GPA = better grad school. It's the right answer.
Pro tip: Major in Accounting and Finance. No compromise, just logic.
chestnutxyz CanadianEnergyBanker Matter of fact, I am currently double majoring in accounting and finance. Would you recommend doing a master's in both majors?
Having reviewed resumes, I can assure you that when we are looking at prospective analysts it doesn't stand out. Yes, it's a nice combination, but there's a fair bit of course overlap generally speaking and neither are regarded as impressive in and of themselves. Also, almost no resume ever stands out in a good way.
Pro tip on your pro tip: Declare accounting major, take the relevant courses (at my university it was the first 15 hours) and keep the dual major on your resume until you walk. This allows you to reap all the benefit, but only requires the most necessary cost. For me it also opened up a ton of recruiting (ie finance functions at big 4, c banking) that was otherwise inaccessible, and allowed be to land rolls (c banking, finance function at F500, FO IBD, Valuation shops) that I may not have landed either in terms of interview or placement, without.
Just to clarify as you're posting in the Equity Research forum, are you asking about an analyst / associate role as an equity researcher or a financial analyst role working on a company's internal finances (i.e. FP&A)?
Speaking to the former, I've seen it go both ways. Some teams really value accounting expertise, especially when the accounting is opaque (e.g. complicated revenue recognition provisions, off-balance sheet disclosures, etc). To some degree, I think there's a selection bias issue as well because accounting majors tend to go into accounting whereas finance majors are more focused on finding jobs that involve forecasts / modelling and such. Bottom line, I don't think there's much of a difference if you dedicate your time and efforts to getting the right internships and networking aggressively.
While my network and connections are more limited in the context of FP&A professionals, I've generally seen more finance majors there. Again, I'd note that there may be a bit of a selection bias thing going on.
Analyst 1inIB - Gen
4y
This is sensible, however: 1) You can easily learn enough accounting on your own to work in investment banking. Some accounting theories in these A&F programmes are totally useless unless you want to do a PhD in Accounting. 2) MSc Finance might teach you more quantitative skills that are harder to self learn. So I would definitely advise to go the finance route.
Disclaimer: I studier A&F at a very theory-heavy uni, this might be different in a business school environment.
I majored in both accounting and finance and would say that the best way to go, if knowledge applicable to a career in finance is what you want, is to major in finance and take up through intermediate financial accounting.
The reason why majoring in finance is preferred to majoring in accounting by many on this forum and the industry in general is because 1). upper level, and arguably some of the hardest, accounting classes (managerial accounting, audit, tax) are completely irrelevant for IB, which means that you're at the very least risking your GPA for classes whose material you cannot use in your desired career path, and 2). in the absence of a sophom*ore IB internship, majoring in finance acts as a proxy for a demonstrated interest in the financial industry.
Accounting Major > Finance Major (Originally Posted: 09/26/2016)
I am currently a sophom*ore who has been trading stocks and options for over a year. I am learning financial modeling on my own and am confused as to why I would study finance over accounting if I want to land an analyst gig out of college. Say I wanted to break into the HF scene.... If I wanted to work for a distressed debt fund, L/S fund, or any type really... Wouldn't accounting be better?
How is finance better than accounting for finance related careers such as IB, PE, AM, and HFs? In accounting don't you learn to understand the financial statements and key drivers for any type of company? Is that not one of the most sought after skills for equity research, investment ideas, etc.?
What does finance exactly give you that accounting does not? I don't want to become an accountant, but I just feel like accounting would give me a larger skillset and understanding of how to run a company, understand a company, and invest in a company. Does finance help you conduct fundamental analysis or Due diligence better than accounting?
I appreciate quick responses as tomorrow is the deadline for applying for upper division major courses.
Agreed - I think it mainly depends on your school and the recruitment process. I went to an SEC school and studying finance would land you a job at the local Regions Bank inside the local Walmart, if you were lucky. A few boutique banks (stephens) recruited, but they solely targeted accounting students. There are upsides / downsides to studying either, I would just research which major has the best placement from your school and think about it that way.
All else being equal - I think studying accounting is the better way to go - but at the end of the day you forget most of the stuff anyway and frankly the only two accounting classes that really teach you a lot are intermediate I & II - so you could study finance and just take those two courses and put that on your resume.
LeorioAccounting Major > Finance Major (Originally Posted: 09/26/2016)
Does finance help you conduct fundamental analysis or Due diligence better than accounting?
Thanks for the post.
Because of it I realised that I don't really understand what "due diligence" means.
I plan to work to understand its meaning now.
I double major-ed in Accting & Finance but if I had to do it all over again, knowing I wanted to be a trader, I would have just majored in Math.
Hence me saying trader. I don't understand the obsession with IB, S&T is such a better lifestyle.
I was a math major. Didn't recruit for finance out of undergrad, but seemed to be respected when interviewing later.
I saw about 1/3 finance 1/3 accouting 1/3 economics......
What accounting classes do you think would be useful outside of financial accounting 1 and MAYBE financial accounting two ..
I feel like I regularly use info from four college courses financial accounting,. intro to finance, Strategic management and Corp Finance
Adv corp finance, private company valuation and analysis of financials stmts would have been helpful, but I had my head in my ass when I was selecting electives
Brosef Stalin17:
What accounting classes do you think would be useful outside of financial accounting 1 and MAYBE financial accounting two ..
I feel like I regularly use info from four college courses financial accounting,. intro to finance, Strategic management and Corp Finance
Adv corp finance, private company valuation and analysis of financials stmts would have been helpful, but I had my head in my ass when I was selecting electives
Agreed. Aside from those financial accounting courses, all the other classes are relevant to accounting careers. But at the same time, finance seems very general to me. I can see how all these financial theories we're taught can be applied realistically, but once you join one of these big companies, they teach you their ways. I've actually heard that whatever your taught in college, is basically irrelevant to what you're actually going to be doing in your job.
To an extent, and definitely in the first few years of university, but if you somehow know you are interested in an M&A oriented career when you are a sophom*ore, the courses I mentioned above would actually be pretty applicable.
like a dumbass, I took upper level major courses like fixed income securities, financial engineering of financial derivatives, management of financial institutions, and some marketing classes as electives.
Tax or valuation accounting - but most likely it's a course only open to majors.
26 Broadwaywhere's your sense of humor?
TippyTop11
Tax or valuation accounting - but most likely it's a course only open to majors.
Hi, I'm sorry if this is a stupid question, but why do you think that learning "tax accounting" would be useful?
I would be really happy if anyone who reads this post of mine could share with me their opinion if they have one!
I double majored in both and am at a lower mm PE shop, and I can say I use my knowledge of accounting much more than finance. Without a solid base knowledge of accounting it is difficult to be able to grasp the revenue drivers and how that affects cash flow, understanding different accounting methods/accruals and working capital flows etc. Some of the advanced corporate/partnership tax classes are also very applicable when you get into deal structuring. At the same time there are finance classes I had that are not at all applicable to my job now.
On the real - go Math. Finance & Accounting are just applied mathematics, and you get the bonus of everyone being impressed with you being a math major.
WhispersAEC:
On the real - go Math. Finance & Accounting are just applied mathematics, and you get the bonus of everyone being impressed with you being a math major.
Its amazing that there are people stupid enough to up vote this. In what possible way is accounting 'applied mathematics'? Easily one of the dumbest comments I have ever seen. Are we now going to refer to everything that involves arithmetic 'applied mathematics'?
Accounting and finance majors serve a specific purpose. If you're looking for a career in one of these fields (excluding quant. roles), it is wise to take them as your major.
Math is NOT a major for just anyone and everyone. It takes a very specific individual to become a math major and you would already know if you were one of them.
The finance and accounting majors combination is extremely powerful and has significant utility (assuming you put the effort in and enjoy it). If you're interested in corporate finance, investment banking, accounting, consulting, then this combination is optimal in my opinion.
I majored in Math at a top 20 non-target. Graduated phi beta kappa, etc. Everyone's experience is different, but so far I have found that internships/directly applicable job experience and networking are WAY more important than your educational resume. As far as college goes my resume could not really have been much better (top math major, varsity athlete, and tour guide - so relatively personable) but my job/internship experience was nearly non-existent and it really hurt me. For junior internships I got a superday for S&T at Citi, but since then I don't think I've ever had a response to any applications I've put out cold to IBD/S&T roles (probably applied to upwards of 100 if we're counting linkedin resume drops).
The truth is that finance is easy and what you learn in class is not that relevant in the real world. I know some schools actually have financial modelling classes and applied investing courses which are solid, but this is not often the case. If I was to do it again, I would do engineering and learn finance on the side, like I had to do anyways.
Nah probably like Materials or Mechanical Engineering.. I work in PE now and the fund I work for focuses on industrial companies and I feel like that knowledge would pay off a lot more than knowing the CAPM formula.
Rutgers? University of Washington?
I have an undergrad business degree with an accounting concentration in addition to having taken the finance classes part of our curriculum (minimal required - covers corporate finance, etc.). I work in corporate banking and spend the vast majority of my time analyzing financial statements of companies, creating & reviewing modeling, checking numbers of analysts, etc.
Accounting in my opinion is by far more useful than finance in corporate and investment banking given you are spending the bulk of your time analyzing company financials and creating modeling. In order to do this you need to know how the financial statements interact with each other, what all the different line items are, how certain accounting treatments & elections how an impact on the consolidated financial performance of the company. Finance isn't really going to teach you how to do this.
The best mix of course work (again in my opinion) in preparation for a banking career is a mix of the most relevant finance & accounting classes. In accounting you want financial accounting , intermediate accounting (typically 2 semesters worth), and financial statement analysis. From finance you'd want corporate finance (i.e. DCF, NPV, etc.), fixed income, investments, IBD class (if your school offers it).
Accounting gets a bad rap on this forum because people tend to think account major --> audit career. Yes, there are audit classes in accounting (usually 1 class) and there are tax classes but you do not need to take these. When going through my analyst program I noticed the biggest gap the non-business major (i.e. Econ) and finance students had to fill was accounting and it was something they struggled with. The people who had a good accounting background were able to hit the ground running much faster.
I'll get a lot of crap thrown at me for this, but business degrees are a waste of time. You can learn all of it on your own, through books or the internet.
It makes more sense to get a degree that will teach you some actual skills, like math or computer engineering. Finance and accounting are all just common sense. The only time it makes sense to major in business is when you go to a prestigious school that allows you to build a network / land a job (but at that point you're going for the people, not the content).
Then out spake brave Horatius, The Captain of the Gate: "To every man upon this earth, death cometh soon or late. And how can man die better than facing fearful odds, For the ashes of his fathers, and the temples of his Gods."
VolSurface:
I'll get a lot of crap thrown at me for this, but business degrees are a waste of time. You can learn all of it on your own, through books or the internet.
It makes more sense to get a degree that will teach you some actual skills, like math or computer engineering. Finance and accounting are all just common sense. The only time it makes sense to major in business is when you go to a prestigious school that allows you to build a network / land a job (but at that point you're going for the people, not the content).
Agreed 100%
VolSurface:
I'll get a lot of crap thrown at me for this, but business degrees are a waste of time. You can learn all of it on your own, through books or the internet.
It makes more sense to get a degree that will teach you some actual skills, like math or computer engineering. Finance and accounting are all just common sense. The only time it makes sense to major in business is when you go to a prestigious school that allows you to build a network / land a job (but at that point you're going for the people, not the content).
LOL. I agree that business degrees are a waste of time, but accounting and finance are common sense? I think just like math and computer engineering, accounting and finance has its place in majors that teach actual skills. Think about it....you probably know some business majors that couldn't even handle those general accounting classes. Accounting sure isn't for everyone.
As someone with a quantitative background, accounting and finance are difficult to classify as 'skills'. A mathematician, physicist, engineer, or even a biologist could quickly learn accounting and finance.
Accounting, though it can get convoluted and messy (I'm not saying it's a trivial subject) really just comes down to knowing a few sets of rules and applying them. A mathematician, who studies the principles of logic on the most fundamental level known to mankind, or a physicist, who explains parts of our universe using mathematical equations because the human imagination cannot fathom their existence, could easily pick up either accounting or finance.
Another example: show a physicist the Black-Scholes equation, and he will say "This is just a differential equation modeling a flux" and immediately understand how to solve (or derive) it, and why it behaves in certain ways. Show it to a finance major and he won't get much further than knowing what inputs impact it in certain ways and how to plug numbers into its solution.
Then out spake brave Horatius, The Captain of the Gate: "To every man upon this earth, death cometh soon or late. And how can man die better than facing fearful odds, For the ashes of his fathers, and the temples of his Gods."
f*ck that. I am giving you a banana+1
True. But math is not specific to any certain career, aside from becoming a math teacher lol.
This could not be more incorrect. Math teachers are rarely mathematicians.
Then out spake brave Horatius, The Captain of the Gate: "To every man upon this earth, death cometh soon or late. And how can man die better than facing fearful odds, For the ashes of his fathers, and the temples of his Gods."
I came from a very non-target major (Biology). If I could go back and do it all over again, I'd major in either Finance, Accounting, or Math. I got to where I wanted to be through timing, luck, and rolling up my sleeves, but my journey could have been 100 times easier had I known that I wanted to pursue Finance from the get go and pursued one of the three majors above.
Array
If you actually want to be the safest you can. You'd just get a Computer Science degree with a minor in Accounting and have a high GPA while self-studying Finance.
That way you have the back up of CompSci, or going back for a MPA to get into accounting. That's about as safe as it gets. But if its not something you're passionate about then you're not going to be able to keep that GPA up.
Major in the closest thing to what you enjoy and are good at, and then work your ass off. You'll be okay.
"It is better to have a friendship based on business, than a business based on friendship." - Rockefeller."Live fast, die hard. Leave a good looking body." - Navy SEAL
Best Response
I see a lot of people taking this thread as an opportunity to do a little bragging and offer sh*tty advice, like triple-majoring. Here's some actual advice:
1. DO NOT pursue a MSA if you have any doubts about being a career accountant. I've seen so many people realize that while they perform well in accounting classes, they find the actual work slit-your-wrist boring.
Pre-MBA: If you are trying to work in IB or the finance industry, a degree in Finance will help you immensely more than anything else. It shows you're interested in business and understand fundamental business & valuation concepts. There are exceptions, but this is largely true unless you come from a top target with a good story about why you suddenly want to work in business/finance.
It is definitely easier to go accounting -> finance than the other way around, but it takes time and is challenging. It helps if you work in transaction services. If you are in tax or audit, it's much more difficult. People who went finance off the bat very rarely pursue accounting because they realized early on that accounting isn't for them.
"Math" is not a f*cking career path, it's academia. In the real world you don't need combinatorics or number theory to evaluate a business. Quant funds are a rare exception, they can throw their sh*t.
Frankly this depends on school.
I know plenty of history, political science, classics and philosophy majors who work at Goldman Sachs, Morgan Stanley, etc.
This advice is really only helpful if you "need it" from your school.
I don't care who your dad is
Permit Mr. Old School who has actually been around for a minute to comment:
1) A Finance major has value in demonstrating interest in Finance.
2) A Finance major typically has limited value outside of the context of investment portfolio management*
3) Accounting is the language of business. Being fluent in a language helps.
4) Financial accounting matters for "outside" valuation purposes and investment decisions. Managerial accounting is where you determine how businesses actually make money. Those results are then subjected to financial accounting externalities (fixed asset accounting, tax structuring, nol's, depreciation, etc.). Most financial accountants know beans about how businesses actually run. Most managerial accountants are on that side because they couldn't/wouldn't get their CPA's.
5) The demand for finance positions in the corporate world is driven primarily by FP&A (financial planning & analysis). This involves being the go-between for accounting and operations for budgets, forecasts, and analysis of actual results. The amount of actual finance necessary for FP&A is minimal.
6) The road I'm surprised more people don't take to IB is accounting undergrad, Big 4 analyst rotation, then flip to grad school with finance emphasis if you don't land in transaction services or advisory services. If you're wired to be a tax or audit type, you likely won't enjoy IB (not enough structure).
7) I currently run two teams of analysts doing economics on capital decisions for an F500 energy firm. We are essentially the internal "deal team" for all the pitches you monkeys send out. My analysts include CFA's, MBA's from both target & non-target schools, and undergrads in Econ, Finance, Accounting and Engineering.
8) Our training focuses on structural modeling combined with operational understanding first, then exploring opportunities for value ( call it "alpha" if you like) second, then deal structuring. I've also worked extensively with IB teams on transactions, internal process development, and financial structuring. Given the work we do and the work I've seen from IB teams, I'm convinced that the best skill set for overall success analyzing and financing deals (and that's really what we're talking about on this thread, not trading or Cap Mkts) is someone with enough applied mathematical and statistical knowledge to model what Ops does, enough accounting knowledge to know what the financial statements are saying (and why they do or don't make sense), and enough finance to understand rates of return for individual capital budget decisions as well as the overall asset base (as well as how to think "financially" about deal options besides financial instruments). Right now, that typically means math, physics, CS, or engineering undergrads with MBA's with enough drive and sense to pick up the accounting as they go. IB may hire differently, but that doesn't mean they're good.
These comments are filtered through a first career in operations, a non-target MBA, BB S&T internship on WS (along with target school classwork), 2 years niche IB/AM, 1 year retail finance(!; argh!!!), 3 years VC; 2 years consulting; and 4 years as a corporate type (including standing up a Corp Fin department from scratch).
Hope this is helpful for someone, and counteracts some of the misinformation on this thread, particularly the BS about math being academia and the general misunderstanding around finance and accounting.
*Business has much more "investment portfolio management" than meets the eye once you realize that all capital spending is essentially an investment in a portfolio. Charles Koch's The Science of Success is a quick and easy read on his Market-Based Management methodology, which is essentially portfolio management for corporate assets.
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I'm not a real banker though...
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