Accounting Isn’t Just About the Numbers. It’s About the Decisions Behind Them.

Enron. WorldCom. Freddie Mac. AIG. Bernie Madoff Investment Securities.

These are just a handful of the most notorious accounting scandals in recent decades.

It’s a familiar list — one that tends to reinforce a narrow view of accounting as compliance, control, or, at worst, manipulation. But for University of Virginia Darden School of Business Professor Justin Hopkins, that framing misses the point.

Accounting, he argues, isn’t just about rules or reporting. It is the language that shapes how organizations think, act and ultimately succeed.

“The practice of accounting is really about the production, dissemination and analysis of information,” Hopkins says in the latest episode of Office Hours, a faculty spotlight series.

“This is learning the language of business,” he adds. “No matter what course you’re going to take, you’re probably going to be using financial information.”

Beyond Debits and Credits

Hopkins understands why many students arrive at business school wary of accounting. For most, their exposure is limited to undergraduate courses focused on debits and credits.

“I think with most disciplines, the surveys, the intros don’t really tell you what it’s about,” he explains. “Once you start grappling with the measurement issues and questions like, ‘what does it really mean to make a profit?’ These are really tough questions to ask.”

That shift — from calculation to interpretation — is where accounting becomes powerful. It’s not just about producing numbers, but about understanding how those numbers are constructed and what they imply.

“In a strategy course, for example, you might talk about a differentiation strategy, or a strategy where you have high margins and low volume. In your finance course, you might talk about weighted average cost of capital or discounted cash flow models,” says Hopkins, the J. Harvie Wilkinson Jr. Associate Professor of Business Administration in the accounting area.

“What I tell students is, no matter what course you’re going to take, you’re probably going to be using financial information — you’re going to be using margins, return on assets — these all come from financial statements that are made by accountants,” he adds. “So, if you don’t know how to read those financial statements, if you don’t know what these terms mean, how can you possibly analyze this information?”

In other words, accounting is less about bookkeeping and more about understanding context.

Information That Shapes Behavior

At the heart of Hopkins’ teaching is a simple yet profound idea: accounting is about information — and how that information shapes behavior.

He is particularly interested in the incentive structures created by financial reporting and measurement.

“If you measure something in a certain way, that’s going to filter through the whole organization, and it’s going to become part of the incentive structure of everyone who’s there,” says Hopkins.

“People will start changing their behavior and how they interact with others and how they continue their jobs, because something is measured this way as opposed to that way,” he adds. “And so it has some real effects on how organizations operate. It has real effects on how decisions are made, and it has real effects on how resources are allocated across the economy. And once you sort of recognize that you see the power in just information, it’s something that really becomes important.”

That insight reframes accounting from a passive reporting function into an active force inside organizations. Metrics don’t just describe reality — they shape it. As Hopkins emphasizes, those choices about measurement ripple across organizations and markets.

For MBA students headed into consulting, finance, tech, or entrepreneurship, that perspective is essential. Every strategic decision — from pricing to investment to hiring — ultimately ties back to how performance is measured.

Hopkins’ research also extends into governance and legal accountability.

“One of the fascinations that I have is about corporate crime — white-collar crime — and in an accounting context, we talk about fraud,” he says.

His latest working paper, “Are the scales of justice tipped? Criminal penalties for corporate executives,” examines whether corporate executives face lower legal penalties than non-executives for white-collar crimes.

Two Cases, One Core Lesson

Hopkins brings these ideas to life through case discussions that force students to wrestle with ambiguity.

In one case, Getting Ready to Rumble: Governance of World Wrestling Entertainment, Inc., students evaluate whether WWE is a viable investment — not by focusing on its theatrical product, but on its governance and financial disclosures.

The company’s family-controlled leadership structure raises questions about oversight, incentives and transparency. As the protagonists debate whether they can “trust a company whose main product requires its customers to suspend disbelief,” they must turn to accounting information — proxy statements, financial reports and performance metrics — to form a judgment.

In another case, How Much Is Too Much? Elon Musk’s Compensation at Tesla, students analyze one of the most controversial pay packages in corporate history.

The case unpacks how Musk’s compensation — potentially worth up to $55 billion — was structured around market capitalization and operational milestones, and how accounting rules and managerial estimates determine when and how that compensation is recognized.

(In 2024, a Delaware Court of Chancery judge struck down Musk’s 2018 compensation package, ruling that shareholders had not been properly informed and the board had not acted independently.)

Here, accounting becomes a lens into incentives. What behaviors does such a compensation structure encourage? How do accounting estimates, such as the probability of hitting performance targets, affect reported results? And what does that mean for shareholders?

These are not technical questions. They are strategic ones.

The Case Method Advantage

At Darden, Hopkins teaches these concepts through the case method, a choice he acknowledges is not always the most efficient way to learn accounting rules.

“The case method is very inefficient if you just want to learn accounting standards,” he says.

But for MBA students, efficiency isn’t the goal. Insight is.

“What they need to know is…what does this information tell me about the future of this company?”

That shift from “What’s the right number?” to “What does this number mean?” is where accounting becomes a tool for decision-making rather than memorization.

“And that’s where it becomes a discussion,” Hopkins adds.

Accounting as a Foundation, Not a Function

Hopkins is quick to emphasize that most of his students won’t become accountants. And that’s exactly the point. Accounting, he says, is like learning a language: “It’s going to make you a better, more informed person, no matter what you do.”

That perspective helps explain why accounting sits at the core of Darden’s curriculum. Whether students are analyzing a leveraged buyout, evaluating a growth strategy, or assessing risk, they rely on financial information generated by accounting.

“Are these the right numbers to be using?” Hopkins asks. “What do these numbers actually represent?”

Those questions don’t belong to accountants alone. They belong to every business leader.

From Classroom to Career

For Hopkins, the ultimate goal is not mastery of accounting rules, but fluency in financial thinking.

The cases he teaches, whether wrestling entertainment or electric vehicles, highlight a consistent theme: behind every headline number lies a series of assumptions, incentives and decisions.

Understanding that complexity is what allows leaders to move from reacting to numbers to questioning them.

And in a world where information drives markets, shapes strategy, and influences behavior, that may be the most valuable skill of all.

To listen to the full conversation, visit “Office Hours,” presented by Darden Ideas to Action.