Professional "brand", personal identity and resistance to change in the Canadian accounting...

Introduction

In 2004, the executives of the Canadian Institute of Chartered Accountants (CICA) and CMA (Certified Management Accountants) Canada announced that they were negotiating a merger that would create one of the largest accounting associations in the world with 100,000 members (Colapinto, 2004; Santos, 2004). This merger was proposed by the senior executives of Chartered Accountants' (CA) Institutes and was seen as a necessary step in repositioning the CA "brand" (their term)1 to deal with the declining demand for attest services, competition from holders of other credentials for senior management positions, and the lack of articling positions within CA firms to continue to provide a flow of new CAs into the profession. The new association was intended to provide flexibility for new members entering the profession and to provide training in a range of skills that would allow them to compete effectively for senior financial management positions particularly against MBA qualified candidates.

The merger quickly began to unravel and within six months it was clear that it would not be ratified by members of either association in the time-frame originally proposed. Several delays occurred as compromises on key issues were negotiated but on 5 March 2005 a joint communiqué announced that merger talks were being discontinued:

Both CMA Canada and the ClCA continue to acknowledge the benefits of the merger. However, despite the best efforts of both organizations, it was not possible to reach agreement on key issues associated with the proposed merger at this time.2

Although not mentioned in the official communiqué, the merger failed largely because of the reaction of members of each association to either the potential loss of their designation (in order to join the merged body) or the dilution of their "brand" equity (by granting the continuing designation to new members through the merger rather than through traditional entry processes). The "product" to be rebranded, that is the members of each association, resisted their association executives' attempt to manage the brand.

There have been several attempts to unify the accounting profession in Canada in order to provide a single brand for all qualified accountants. In each of these cases, the reaction of members to the proposed merger has been crucial in determining the success or failure of the merger and in shaping the nature of the brand repositioning. This article compares the most recent, unsuccessful, merger attempt between the CAs and CMAs with the successful merger of the CAs and Certified Public Accountants (CPA) in 1960 resulting in the disappearance of the CPA brand in Canada.

The case studies provide insights into the strategic rigidity that a strong brand can create in professional associations. This rigidity stems from two factors: first, the fact that professionals internalize their "brand" as part of their personal identities; and, second, the power that professionals possess as voting members of professional associations. The first factor provides professionals with a personal reason for resisting brand repositioning efforts by the executives and administrators of professional associations. The second factor provides them with the political power to effectively resist such changes.

Our analysis of the cases draws on two literatures that have not been previously combined. On the one hand, we draw on institutional theory and the sociological literature on the professions to conceptualize and analyze the dynamics of the mergers within a professional field. On the other hand, we draw on the literature on brand management to understand the market logic underlying the need for and likely success or failure of a merger of accounting associations and designations. The combination of these two perspectives allows us to combine our understanding of the reaction of individual members of the profession to merger proposals with the effect of the mergers on the accounting market and the institutional field within which accounting associations operate.

The article is organized as follows. We begin by identifying the types of brands used by accountants and their relative importance in the Canadian accounting market. We then examine how the market for accounting services has been segmented through product differentiation by accounting associations. We continue by exploring the way that accounting designations become "infused with value beyond the technical requirements of the task at hand" (Selznick, 1957, p.17) and part of accountants' personal identity. We finish our conceptual review by discussing the role of mergers between accounting associations in structuring the field of accounting practice. This conceptual discussion provides the background for our comparative case study of the 1960 CA/CPA merger and the 2004 CA/ CMA merger. These case studies provide evidence on the official reasons for the merger and members' reaction to the proposals. We conclude by considering the implications of the case studies for the likely success of accounting association mergers considered as both brand repositioning exercises and reformations of professional identities.

Professional branding

Accounting and auditing are "credence" goods where customers experience difficulty in judging quality even after purchase and use of the service, and they choose their service provider largely on the basis of reputation (Nelson, 1970; Darby & Kami, 1973). For much of the accounting profession's history this reputation was developed informally through networks and word-of-mouth. Advertising by accountants was explicitly prohibited by professional ethics until the 1970s in many countries (O'Donohoe et al., 1991). The ban on advertising did not mean that accountants were undifferentiated in the minds of consumers but since the removal of this ban the strategies for differentiation and reputation building have changed and the branding of accountants has become more explicit (Bougen, 1994; Kaikati, 2003).

Branding involves the use of a "name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers" (Kotler, 2003, p.418). There are many individuals performing accounting and auditing functions as independent actors and they rely on their personal reputation to sell their services. Most of the key roles in accounting, however, are structured by three types of "brands" that vary across jurisdictions in their public recognition and importance to the individual practitioner - reserved titles (professional designations), trademarks (organizational names), and licensing (state restricted practice rights legislation). The relationship between these three brands in terms of membership by individuals in one, two or all of these brand categories in Canada is diagrammed in Figure 1.

Each of these "brands" meets Kotler's (1997, p.443) premise that brands are "essentially a seller's promise to deliver a specific set of features, benefits, and services to the buyers". In each case, the service provider may differ but the brand conveys information to the consumer about the qualification of the individual who bears the brand and the quality of service that will be provided. These brands rely on distinct institutional mechanisms to provide consumers with assurance regarding the implied promise. We discuss each brand later.

The professional field as a whole in Canada is organized by different professional associations, who conduct education and certification programs leading to a designation or, legally speaking, a reserved title, which is used to signal the knowledge and competence of the individual. These designations historically have distinguished between public accountants (working for clients primarily as auditors and tax advisors) and management accountants who work within large organizations in a variety of roles. This distinction however has become fuzzy as accountants originally certified by an association focused on public accounting continue to bear that designation when they leave public accounting to work within an organization. For example, about 60 percent of Canadian CAs work as management accountants although all have been trained as public accountants. This statistic has been relatively constant since the 1930s (cf. MacKenzie, 1989, p.35; ICAO, 2005, p.19).

Although there was a brief flirtation with an international accounting designation in the late 1990s (initially called "XYZ" and finally "Cognitor" [XYZ, 2000]), accounting designations are awarded by domestic associations. The use of the same designation across national borders reflects both the power of these brands (and hence their imitation) and the role of the UK (for the CA designation) and the USA (for the CPA and CMA designations) as a model for the organization of the accounting profession in other countries (see Parker, 2005, for a discussion of this phenomenon).

Public accountants usually practice as part of a firm (partnership), some of which employ thousands of qualified accountants. The largest of these public accounting firms have become brand names (trademarks) in their own right (Barr & McNeilly, 2003). The "Big-Four"3 - Ernst and Young, Deloitte Touche Tohmatsu, PriceWaterhouseCoopers, and KPMG - are widely regarded as possessing a reputation that differentiates them from other, smaller accounting firms (for example Simunic & Stein, 1987). This reputation allows them to charge premium fees and to be the auditor of choice for clients seeking to raise their status in the capital markets. Covaleski et al. (1998) have documented the techniques that large accounting firms use to shape the identity of individuals within the firm and note that the individuals' professional identity provided a rationale and resource for resisting the firms' attempt to brand the individual according to their norms. Individuals do not give up their attachment to a professional association when they enter an accounting firm.

Finally, some accounting roles are regulated by the state and accountants practicing these roles must be licensed to provide the public with assurance that practitioners have a minimum level of qualifications. In Canada, the public accountants' license is not seen as a publicly valued brand and there are no identifying initials or other title associated with the license.4

In Canada, the professional designation is the key brand for accountants. This designation is independent of the specialization within accounting that the individual practices, whether the individual is a licensed public accountant or not, and transcends their place of employment. As we will argue later, the professional designation and membership in a professional association becomes an important part of the individual's personal identity. The remainder of the article focuses on professional designations.

Product differentiation among professional designations

The three national accounting associations in Canada have differentiated themselves in part by function but they are also differentiated by status. The Chartered Accountants were the first professional accounting association formed in Canada (in 1883) and historically had privileged access to the audit function since their designation was used as a de facto licensing standard in several provinces, that is a person holding a CA designation was automatically granted a public accountant's license, all others had to apply and be reviewed by a licensing council (see MacDonald & Richardson, 2004). This situation has changed over the last 10 years such that all three designations now have access to public accounting licenses in most jurisdictions. The CAs, however, emphasize their role as auditors of large public companies and require an apprenticeship in a public accounting firm prior to certification as a CA.

The Certified General Accountants of Canada (CGAs). now CGA Canada, incorporated in 1913 as a forum for the technical advancement of salaried accountants and to provide a route to professional accreditation that did not require an apprenticeship with a public accounting firm (and the attendant opportunity cost of this route into the profession) (see Richardson, 1993). The initial membership in this association was concentrated in the railroads and government tax offices. They continue to emphasize the diversity of their membership and the flexibility of career paths with the designation.

The CMAs were formed by the CAs in 1920 to represent salaried accountants and although originally they were not to offer a designation, they soon moved into this role initially offering the Registered Industrial Accountant designation (RIA), then, following US practice, switched to the CMA designation (Allan, 1982). In recent years the CMAs have been successful in repositioning their designation from a focus on providing management information and analysis to a designation that is a stepping stone into senior financial management roles.

The Canadian CPAs originally formed in 1919 and went through several names and designations (including IPA [Independent Public Accountant] and LA [Licenciate in Accounting]) before adopting the CPA designation in 1936 (see Richardson, 1993).They became a national association in 1951.The association was open to members practicing accounting in any capacity including public accounting. They had a particular concentration of members in government taxation offices. They, like the CGAs, were differentiated from CAs by their openness to training outside of public accounting.

Professional accounting associations are now managed by full-time administrators, who are in many ways "brand managers" (Low & Fullerton, 1994). It is the responsibility of association managers to maintain the quality of the brand through control of the education and disciplinary processes. They also seek to maintain members' interest in and commitment to the association in part through specific services they provide to members but importantly by developing members' pride in their own designation and its achievements.5 It is also their responsibility to provide environmental scanning and to lead visioning exercises that change the product characteristics to maintain the relevance and value of the brand to stakeholders.

Professional identity

A professional designation is a signal to consumers about the attributes of the accountants bearing that brand. For branding to be effective, especially with servicesbased products, internal branding must take place. According to Kotler (2003, p.420) this means that "everyone in the company lives the brand". The professional accountant internalizes this brand as part of who they are and how the external world reacts to them. This identification with the brand is reflected, for example, in the hours of volunteer work that individuals will do for their association. The professional brand, in terms of Goodyear's (1996) typology, is an "icon" (a symbol that conveys meaning beyond the functional use of the product, such as social status) but rather than being used by the consumer to express their affiliation with certain values, it is the producer who makes this association. Like the Harley Davidson customer who tattoos the company logo on their arm to show their attachment to the product, professional accountants wear lapel pins and ties bearing the professional logo as a way of signaling their attachment to their association.

The quality and characteristics of services depend on the attitudes and actions of those providing the services (De Chernatony & Dall'Olmo Riley, 1997). It is common therefore to market service brands internally, that is to the service providers, before marketing to customers. The identification of professionals with their associations is one mechanism by which professional services become standardized and reflective of the brand's image (cf. Blankson & Kalafatis, 1999). The image of accountants has been of great concern to accounting associations in part for this reason but also because this image may limit the roles for which clients will consider their accountant. Image advertising by accounting associations simultaneously shapes client expectations and members' self-image. For example, in 2000 the CAs began a three-year campaign called "CA - Your competitive advantage" that promoted the broad range of skills of CAs and their linkage to strategic decisions. Interestingly, Gendron and Suddaby (2004) found that during this period CAs were experiencing considerable insecurity about their identity. This reflects an attachment to traditional definitions of the profession amidst continuing signs that the profession was in transition.

The professional's identity is thus a complex amalgam of (1) the attempt by the professional association to socialize the individual to behave as a "professional", that is according to the profession's norms and aspirations; (2) the self-image of the individual and their ego-involvement with their occupational role; and, (3) the expectations for the professional that are "reflected" back from clients and the general public. This is consistent with Hall's (1996) view of identity as both a form of subjectivity and a social process that anchors us in a social position. Each of these dimensions tends to reinforce the idea that professional identities will be strongly held by individual practitioners.

The existence of a self-aware "product" raises problems for brand management particularly when the "product" is also the owner of the brand as is the case with a professional association. Every attempt to reposition the brand requires that association administrators manage both the internal and external dynamics of change (Klegon, 1978). The focus in this article is on the internal dynamics of brand repositioning and, in particular, with the reaction of those already "branded" to the proposed change in their professional identities. One of the most dramatic examples of brand repositioning occurs during mergers of accounting associations. This requires one group of accountants to relinquish their former identity to take on another while the former members of the continuing association must adjust their self-image to accommodate the change in public perception engendered by the new members (and to change their perception of former rivals). These mergers are used to explore the effect of members' self-image on repositioning the professional brand.

Mergers among accounting associations

The merger of accounting associations may represent an attempt by specific organizations to gain market power, provide economies of scale in the provision of member services, seek legitimacy and, importantly, to reposition the professional brand in response to changing market conditions. The merger of associations may also redefine the professional roles of members and the tasks that members claim as part of their competency. These mergers are thus part of the process by which the "institutional field" (Allport, 1933, p.21; DiMaggio & Powell, 1983) within which accounting is practiced is reformed, establishing new norms and identities for those who practice within the field. This is one of the ways by which accounting associations seek to define the jurisdiction of the profession (Abbott, 1988).

The need to redefine the profession stems from the dynamic nature of accounting practice (Richardson, 1997). The tasks that have been linked to the occupational titles of "accountant" and "auditor" have shifted over time in response to changes in technologies, law and the structure of the economy. Accounting associations, on behalf of their members, monitor the environment and attempt to ensure that their members have the "competencies" necessary for commercial success (Birkett, 1993). Abbott (1988) notes that the attempt by one profession (or branch of the profession) to expand its domain will typically result in conflict with other occupational groups who already claim the intellectual domain at issue. These boundary and jurisdictional issues/disputes are seen by Abbott (1988) to be the central issues in defining a profession.

There are several strategies that have been used by accountants to establish jurisdiction over an expanded domain of practice including merging with other professional associations, establishing subordinate occupations, or creating joint ventures with other occupations (cf. Lawrence, 2004). Mergers, however, have been the most common approach used or attempted by associations to secure their domain. This has been noted in many countries including Canada (Richardson, 1989a), the USA (for example Miranti, 1986) and the UK (for example Walker & Shackleton, 1995).

In several cases, mergers within the accounting profession have been encouraged by the state in an attempt to regulate the audit function and encourage the creation of a single professional association of public accountants to establish ethical standards and enforce internal discipline (Richardson, 1989a; Walker & Shackleton, 1995). Mergers originating from this source have tended to reinforce the separation of public accounting and management accounting while simultaneously reducing the diversity of professional associations associated with public practice. In spite of the potential use of state power to secure a protected domain of practice, these mergers have not been uniformly successful.

The work by Richardson (1989a) and Walker and Shackleton (1995) developed the view that accounting associations have a corporatist relationship with the state. This means that use of state powers by accounting associations comes with the expectation that the leaders of the profession will manage the rank-and-file members to keep professional disputes out of the political arena and will engage the profession in the implementation of state policy. This model of the profession suggests that the leaders and administrators of the profession must secure the consent of members to strategic changes. Mergers within the profession bring practitioners into a single administrative unit that facilitates both the management of demands from the rank-and-file and allows more consistent implementation of state policy. The central difficulty for the leaders of the profession is to overcome divisions among practitioners that stand in the way of creating a unified profession.

In the time periods examined by Miranti (1986) in the USA and Walker and Shackleton (1995) in the UK, professional designations were correlated with national (or regional) identities further complicating the attempt to merge associations. In Canada there was no evidence of "nativism" among accounting associations (Richardson, 1989b), so the attachment of individuals to their professional body may not have been as strong as the attachment of accountants in the USA and UK to their organizations. This may be an additional factor that would explain the relative success of mergers among accounting associations in Canada compared to the UK during the immediate post-war rationalization of the public accounting profession.

The possibility of merger within the accounting profession has also been raised independently of state intervention. These mergers were proposed to gain economies of scale in the provision of association services, reposition the association to reflect changes in the market for professional services, and to ensure the social legitimacy of the association (for example Richardson, 2002). In general, mergers for these reasons have failed and usually due to the resistance of accountants to the alteration of their "brand" without the offsetting benefits that may come from the creation of monopolies of practice by the state.

The merger of accounting associations thus may be initiated by a variety of actors and justified on bases ranging from economic efficiency in the provision of services to the creation of a unified block to speak on behalf of the profession in interaction with government bodies. Regardless of the dynamics underlying these mergers, they can be regarded as part of the jurisdictional disputes among rival groups of knowledge workers that serve to create the boundaries of the profession. Merger negotiations among associations therefore provide insights into the pressures for change in the profession and the sources of inertia that limit the profession's ability to adapt.

The development of a distinct professional identity, whether based on similarities among practitioners or other claims to loyalty, may affect the way in which the jurisdictional issues within accountancy are resolved. Both the corporatist view of accounting associations and the view of association leaders/administrators as brand managers suggests that there may be a tension between the role of the senior members of the profession in leading strategic change and individuals' integration of their designation and professional association as part of their personal and professional identity.

Two case studies

The role of the branding and the professional identity of accountants in the merger of accounting associations is explored by a comparative case study of two mergers in Canada: one successful and one unsuccessful. The first merger was between the CAs and CPAs. The merged association continued under the name "Chartered Accountants". This merger was first discussed in 1960 and completed in all Canadian provinces by 1970. It was a crucial merger in terms of giving the CAs virtual monopoly control of public accounting in Canada and justifying the use of the CA designation as the standard for public accounting licenses in many provinces. The second merger was the attempt to merge the CAs and Certified Management Accountants in 2004. This merger attempt is significant as it signaled the repositioning and extension of the CA brand away from public accounting and into financial management.

The data for these case studies were drawn from the professional publications of the associations and from published histories commissioned by each association or written by academics. In the first case study this was limited to print publications; in the second case study, on-line materials (including video images of town-hall meetings)6 were also reviewed. The professional publications were reviewed for the entire period from the first mention of the potential merger through to its final resolution. For CAs the publication reviewed was the Canadian Chartered Accountant (now CA Magazine), for CPAs this was the Canadian Journal of Accountancy, for CMAs this was Cost and Management (now CMA Management), and for CGAs this was CGA Magazine.

Data were collected to capture two aspects of the phenomenon. First, editorials, official announcements and reports of meetings were reviewed to identify the view of the merger by senior association administrators and elected officials. The data revealed a formal set of reasons provided in press releases and on other public occasions but also provided evidence of the internal concerns that were driving the desire to merge. The following discussion distinguishes between the official reasons for the merger and the reasons for the merger from the perspective of the executives of each association where differences exist. Second, letters to the editor and articles referring to "town hall" meetings or other venues in which members were encouraged to express their view of the mergers were reviewed to capture their response to the redefinition of the brand.

The CA/CPA merger 1960

The 1960 CA/CPA merger was initiated in Ontario by the Institute of Chartered Accountants of Ontario (ICAO) as a merger of two provincial institutions. Since Ontario contained the majority of members of each association and provided most of the resources for the national offices of the associations, a merger at this level would result in the collapse of the CPAs nationally and thus motivated merger negotiations within all provinces. If successful, the merger would result in an association with 5,000 members. The increased scale of operations would also allow the CA Institute to devote more resources to education, standard-setting and the enforcement of standards, all of which would result in an increase in the perceived quality of the designation.

There were two prima facie reasons for the merger. First, the CPAs were gaining clients in the public accounting market and were establishing firms to compete with CA firms. The CPA "brand" was well established in the USA and this provided name recognition to the Canadian CPAs and some confusion to USA companies with branch plants in Canada. For example, in British Columbia this issue was of such concern that the CAs imposed a "public relations levy" on members to fund a public awareness campaign to raise consciousness of differences between associations (Affleck, 1980, p.25). Second, the licensing of public accountants in Ontario, the geographic hub of business in Canada, had been instituted in 1950 with a licensing board which, for political reasons, had included both CA and CPA representatives but with the CAs holding a majority of seats (8 of 15 seats) (Richardson, 1989a; MacDonald & Richardson, 2004). The standard for licensing however did not require membership in either association and a significant number of public accountants remained independent after licensing was introduced. The merger, and grandfathering of unaffiliated public accountants, was seen as a way of raising the licensing standard to require membership in the combined association.

The official reasons for merger

The official rationale for the merger was to protect the public by raising the standard of entry to public accounting and providing consistent discipline from a single professional body over all licensed public accountants. This was a two-step process requiring the merger of the two professional associations focused on public accounting and then the revision of the Ontario Public Accountancy Act to require a higher standard of qualifications and to restrict access to a license to members of the merged association.

From the CA perspective

The CA executive published the full text of their letter of offer to merge in 1961 highlighting the official rationale to "control the field of public accounting and the raising of standards". Canadian Chartered Accountant (1961a, p.134) suggested further that the public is confused by multiple designations and the merger "would not completely eliminate the possibilities of misunderstanding,7 but it would certainly remove the most obvious cause of confusion". The Canadian Chartered Accountant (1961a, p.133) editorial also recognized that bringing CPAs into membership would "risk some sacrifice now for what they are confident is in the public interest and, therefore, in the long term interest of Chartered Accountants". The sacrifice is the sudden increase in numbers of CAs in practice that, presumably, would remove a source of competitive advantage for existing CAs (assuming them to be the higher reputation accountants).

The editorial reinforces the CA view that accountants in public practice are more important than those employed by organizations even within the CA profession. They claimed that, "members in industry have always recognized that the future value of their membership depends primarily on the practicing members maintaining the reputation of the Institute". Implicitly the claim is that if members in public practice are willing to bear the cost of increased competition by allowing the merger to occur, then CA members in industry should simply agree.

On 12 April 1961 the CAs voted on the merger at a special meeting held in Toronto and it was defeated (475 against versus 422 in favour). In spite of this vote, the executive noted that the "matter is not closed and will be the subject of further study" (Canadian Chartered Accountant, 196Ib). Based on a straw poll of all members the ICAO President asserted at a meeting the following day that, "those who opposed the merger have succeeded in defeating the will of the majority" (cited in Curtis, 1961, p.520). A second vote held on 28 May 1962, after a motion to allow proxy ballots was passed at the 15 June 1961 Annual General Meeting of the Institute. In this vote, the merger was approved by members by a vote of 2243 to 158.

From the CPA perspective

The executive of the CPA Association, reflecting the CA stance (and duplicating the wording of the rationale for merger), claimed that the merger was necessary to "control the field of public accounting and the raising of standards" (Canadian Journal of Accountancy, 1961, p.57).The executive however questioned, "why the elimination of the Ontario [CPA] Association is essential to the achievement of the Institute's desire to raise the standards of the profession" (Canadian Journal of Accountancy, 1961, p.59). They recognized that the Institute was gaining monopoly control over public accounting as well as raising the standards for entry to the profession.

Raising standards was to be accomplished by limiting public accounting licenses to those public accountants who were members of the merged body and had public accounting experience. The CPAs differed mainly from the CAs in accepting experience from those outside of public accounting for credit towards their designation. The original merger proposal from the CAs (dated 20 December 1960) included a provision to take into membership CPAs without public accounting experience but with "a separate designation" such as ACA (Associate Chartered Accountant; Canadian Journal of Accountancy, 1961, p.58). This provision was not well received by the CA membership and was withdrawn during negotiations with the promise instead to find "an existing accounting body" (Canadian Journal of Accountancy, 1961, p.58, that is the CMAs or CGAs) to take in members in industry (ICAO, 1961). Although the revised merger proposal was accepted by the CPAs, the vote by the executive was not unanimous. The merger proposal was put to the membership on 2 June 1962 (after the CAs had held their vote) and achieved an overwhelming majority (782 for and 7 opposed). The merger allowed all existing members to become CAs but required that students in industry apply for membership with the CMAs.

Reactions from other associations

The suggestion that the CAs might create an ACA designation to accommodate CPAs who were not in public practice was also a cause of concern among CMAs (Allan, 1982, pp.79-30). They saw this as the creation of a competing designation in their domain of practice. In order to preclude this possibility, they offered to take into membership any CPAs not in public practice and to provide an education program for CPA students. This would require an increase in the amount of financial accounting material in their education program to the same level as the CPA education (thereby providing an education program that was suitable for those wishing to enter public practice).

Furthermore, the CAs, CPAs, CGAs and CMAs wrote a formal agreement recognizing the distinction between the attest function and management planning and control as the bases for separate professional jurisdictions. This agreement was ultimately reflected in the revisions to the Ontario Public Accountants Act that differentiated between "public accounting" (the regulated domain) and "cost accounting" (the unregulated domain). The CMAs and CGAs opened talks to unify the management accounting half of the profession in 1960 but this effort was ultimately abandoned in 1964 (Allan, 1982, p.80).

Concerns of members

The potential merger of the CA and CPA designations generated numerous letters to the editor of Canadian Chartered Accountant during this period. Since this is a CA publication there is the possibility that the letters published were biased either through selection or editing. Contrary to this however, the Canadian Chartered Accountant is a national publication and the merger was, initially, seen primarily as an Ontario phenomenon. An early editorial, for example, was openly critical of the possible reasons for a merger (Canadian Chartered Accountant, 1961a) suggesting that:

if the only purpose of the merger is to eliminate an active competitor, Chartered Accountants will naturally be hesitant to vote for such a proposal. Competition is a useful corrective for those who sell services, as it is for those who sell goods. It prevents lethargy and complacency from dominating a group.

These letters are the only data available on members' reactions and are taken as valid reflections of the majority of concerns.

The concerns expressed by CA members highlight the view of CPAs as persons of lesser quality than themselves. J.R.M. Wilson, Senior Partner of the accounting firm Clarkson Gordon, is quoted as saying "by our actions and in our conversations we treat them as being a lesser breed and their members are more than a little aware of our attitude to them which, not surprisingly, they consider arrogant" (cited in Creighton, 1984, p.239).

Townsend (1961, p.128) argued that, "any proposal for the recognition of such obviously unsatisfactory persons [the CPAs] as CAs hardly warrants serious consideration or discussion." Townsend quotes from a speech given to new members "we have made the words 'Chartered Accountant' mean something special - let us keep it that way". Townsend clearly recognizes the brand equity that has been developed in the CA name. He accuses the executive of the Institute of Chartered Accountants of Ontario of betrayal: "the fact that the problem will cease to exist forty years after the merger must not be allowed to lull us into accepting the proposal". The "problem" to which he refers is, of course, the CPAs brought into membership and the solution is their death and retirement over 40 years.

Townsend was a member of the CA firm Thorne, Mulholland, Howson and McPherson. This firm (a mid-size firm headquartered in Toronto) led the resistance to the merger that resulted in the first unfavorable vote. Kris Mapp, a senior partner in the firm and a former CICA President, had been responsible for creating the CA examination system and argued at the public meeting that the CA entry process set them apart from other accountants. His vision of the CA profession was of an elite group of accountants banding together for mutual gain. His vision rejected the use of the CA designation as part of public policy in the control and licensing of auditing (Creighton, 1984, p.240). It is also likely that the greatest impact of the merger would be experienced by small and medium-sized accounting firms. The merger would remove one means of small CA firms to differentiate themselves from CPA competitors. Since there were no large CPA firms in Canada at this time, the issue did not affect the larger CA firms.

Caviller (1961, p.218) arguing in favor of the merger rebuked his colleagues: "let us not mistake our vanity for the public interest". His letter hints at the more extreme level of rhetoric that filled the public meetings and that is not reflected in the letters to the editor: "Let us not allow our decision to be influenced by emotional harangues, intemperate accusations and imputations, and bad manners. The public expects us to avoid considerations of narrow self-interest and personal prejudice. It expects us to be wary of fanatics and bigots and to come to a decision which is in the public interest".

Members recognized that the ultimate goal of the merger was "to make public accountancy in Ontario synonymous with Chartered Accountancy" (Rosen, 1961, p.218) but Rosen (1961, p.220) expresses concern about the implied two tier status of accountants in public accountancy versus industry: "all of our work as accountants is professional and there is no need to indicate that any type of work is more professional than any other". His remarks reflect an ambivalence: while the CA brand is focused on public accounting, people so branded have moved into management accounting work. Is a CA who leaves public practice less professional than one who remains in that field?

The issue is whether, in order to maintain control over a market, the CA brand should be extended to include work outside the core of public practice. Cleather (1961, p.220) states bluntly "we cannot expect to continue to control our profession when present trends clearly indicate that, without lowering our standards, we may some day become a minority accounting body". "Our choice is quite clear; we either move with the present social forces and protect ourselves and our society by closing the profession and raising our standards or we are overcome by these forces. I believe we have been asked to pay a small price for moving forward, to achieve a status comparable to other major professions" (Cleather, 1961, p.220).

Gregory (1961) offers his opinion on the matters of fact underlying the merger. He claims, for example, that there is no confusion in the public's mind between CPAs and CAs: "at least not in ... public esteem". He draws the analogy that:

if the medical profession were to merge with the ostéopathie profession." it too would lessen the confusion of the public. This is obviously ridiculous, but no more than the proposed merger of qualified public accountants with industrial accountants. Gregory (1961. p.2)

His reaction to claims that the CPA and CA education process were substantially equivalent was "let's revise our thinking, keep our self esteem (and therefore the esteem of the general public) by refusing to concede that our degree is no better than that of CPA" (Gregory, 1961).

Summary

The CA/CPA merger brought together the two largest accounting associations in Canada at that time. The key difference between the two organizations was that the CPAs allowed entry to their designation with experience outside of public accounting (that is an apprenticeship with an existing firm). This difference in experiential training, and the rigor of their final examination, was seen by CAs as the factors that separated CAs and CPAs in quality.

The merger was motivated by the opportunity for the CAs to gain control over public accounting practice and the merger was ultimately successful because the legislation affecting public accountants' licenses was passed by the Ontario legislature contingent on the completion of the CA/CPA merger. This provided the payoff to ordinary CA members that allowed them to accept the merger proposal. This legislation is interesting for two reasons. First, it signals that the government was co-opted into the process and supported the CA aspirations to close the profession. Second, it provided a third-party guarantee of one of the crucial intended outcomes of the merger. This suggests a level of mistrust among the parties that the outcomes that would allow all parties to benefit would actually be achieved after the merger process.

The key change in the merger negotiations leading to success was the removal of a proposal to create a subsidiary designation (the ACA). This was necessary to maintain the CAs' identity as holding a single standard of qualification but required them to grandfather over 1,000 new members who may have had less acceptable qualifications. The image of the brand as a unique and singular mark of excellence was seen as more important than the integrity of the process that lay behind this image.

Interestingly the CAs did not use the CPA designation as a co-brand during the transition period. Co-branding is the combination of two or more well-known brand names (such as the CPA and CA brands) used when one or the other brand hopes to reach a new market segment. Keller (1998) considers this part of a "brand hierarchy" and recommends it particularly for service-based products being targeted to different market segments. In this case, however, CPAs immediately became CAs and no further reference to the CPA brand was allowed. The CAs kept the CPA association alive as a legal fiction, holding annual meetings with a shadow executive to fulfill legal obligations (Creighton, 1984). This allowed them to retain control of the CPA designation in Canada; a reflection of their belief that the brand had market value.

The CA/CMA merger 2004

The 2004 CA/CMA merger discussions were initiated by the CAs following on the "Report of the Council of Senior Executives" (a public version was released in July, Council of Senior Executives, 2004). The report was a blunt assessment of the CA profession: the audit market had stagnated, other designations and degrees (specifically the MBA) were gaining inroads into senior management positions, and the CA profession was not growing fast enough to finance strategic renewal. The Report recommended a merger with the CMAs, or failing that, the creation of a new management stream within the CA profession that would not require an apprenticeship in public accounting or be focused on auditing. The report was explicit in its intent: "Our Goal For Canada's Chartered Accountants: That CAs dominate all senior financial positions and advisory roles". These recommendations represent a fundamental repositioning and extension of the CA brand.9

On 11 May 2004 the CAs and CMAs issued a press release indicating that discussions had begun at the national level and within all of the provinces (the professions are regulated at the provincial level so a merger would have to be implemented at that level). On 5 October 2004 merger talks were suspended when agreement could not be reached in Quebec. The situation in Quebec was complicated because it involved, at the request of the Provincial government, all three major accounting associations (CA, CMA, CGA). On 26 October 2004 a further communiqué was issued indicating that a taskforce had been created to reconsider the structure of the merger and no proposal would be presented to the membership until at least 2005. Finally, on 5 March 2005 the merger talks were officially abandoned.

Official reasons for the merger

The reasons for the merger were repeated frequently in official publications and websites (for example CMA Magazine, 2004; Institute of Chartered Accountants of British Columbia [ICABC], 2004a,b; Institute of Chartered Accountants of Manitoba [ICAM], 2004a,b,c).

The merger:

* Creates a larger, stronger and more influential body that is able to supply its markets with Canada's pre-eminent business professionals

* Improves services to the clients, employers, the public and members, resulting from economies of scale and increased co-ordination

* Creates new opportunities to enhance standards to protect the public interest, particularly in the areas of corporate governance, financial management, and audit and assurance

* Acknowledges the predominance of members in senior positions in industry, the public sector and other organizations

* Strengthens Canada's voice in the increasingly globalized accounting profession

* Strengthens and streamlines relationships with regulators and educators ...

* Creates Canada's most recognized, respected and influential business professional

* Capitalizes on CMAs' leadership in strategic management and CAs' leadership in audit and assurance, and tax

* Generates growth for the new profession and provides its members with broader career choices and enhanced opportunities

* Strengthens the brand

* Makes the profession more attractive to Canada's best and brightest.

Reasons for merger from the CA perspective

The CAs argued that their strategic analysis indicated the need to move the brand out of public accounting in order to maintain market share (Council of Senior Executives, 2004). Public accounting was not a growth market and the requirement that CA students have an apprenticeship in public accounting created a bottleneck that limited growth. This could be overcome by creating a management stream within the existing CA education and certification structure. This option was seen as the default should a merger fail. The merger was presented as a "make versus buy" decision (ICAM, 2004c). The "make" option was seen as too time consuming to address pressing strategic needs and left the profession with further competition for the financial management positions to which the CAs aspire.The "buy" option was faster, provided economies of scale and eliminated a competing designation/brand.

Reasons for the merger from the CMA perspective

The CMAs presented the merger to their members as a defensive necessity. They point to the "convergence" (Browning, 2004) of the CA and CMA professions in terms of the equalization of public practice rights under new legislation in many provinces and the increasing movement of CAs into financial management - the traditional domain of CMAs. This convergence meant both an increased duplication of activities of the two organizations and increased competition between their members for jobs.

The only differentiator would be the name of the designation - and the brand equity or "prestige" factor that each designation enjoys ... I'm not here to suggest that CMAs couldn't ultimately win that battle. But to suggest that for the profession, and for members, there may be a better way. Rather than continuing to build two separate, yet increasingly duplicate, organizations - why not explore a way to make the profession stronger, by creating one organization that harnesses the power of both ... As new "CAs". current CMAs would no longer be subjected to the glass ceiling created by a tradition of perception. We would now compete on a level playing field. (Browning, 2004)

The CMAs were selling this to their members purely as a status enhancement opportunity, an opportunity to be re-branded. There was no claim that the CMAs needed to merge as a matter of maintaining the relevance of their brand or because of financial necessity (a question explicitly asked by members). In fact the desire of the CAs to reposition their brand into the CMA domain provides evidence of the success of this market segment.

CA member reactions

The CAs held a series of "townhall" meetings across the country to gauge reaction to the proposed merger. The reaction was mixed. The concern most commonly expressed was that the merger would dilute the value of the CA designation either directly through the increase in numbers and consequently the increase in competition within the designation, or indirectly through the dilution of the reputation of the brand (ICABC, 2004b). A recurrent suggestion was that there be some differentiation between those who have attained the CA designation by examination and experience in public accounting and those who have attained the designation by merger. A frequent claim, not supported by facts, was that CMAs are simply failed CAs and that the merger allows them to get in "by the backdoor" (ICAM, 2004a).

The existence of an option to create a management accounting stream within the CA profession complicated members' reaction to the merger proposal. This option both raised questions about why there was a need to merge if they could "go it alone" and presented the abandonment of the public accounting focus of the CAs as a fait accompli. If the change in brand position could not be avoided, then a merger served to remove a competitor in the new product space.

There is also an interesting issue that was not raised by members. The CA strategic analysis showed that CAs were perceived as strong in audit and compliance functions while MBAs were strong in strategic analysis functions (Council of Senior Executives, 2004, p.46). The CMAs were seen as strong in neither area in the CA commissioned surveys. The natural "merger" to provide a balanced set of skills for CAs would thus seem to be to require an MBA degree for qualification as a CA. This alternative was not discussed in meetings but documents point to the inconsistencies of MBA programs as an issue. The weakness of the CMAs in the areas where MBAs are regarded as strong raises the question of why merger with them would raise the profile of CAs on these dimensions. Again, this issue was not discussed.

CMA member reactions

The CMAs also held "townhall" meetings.10 The CMA response to the merger proposal was, in general, mixed. There was an apparent acceptance that the CA designation was the higher status designation such that the re-branding of CMAs was welcomed. The key concerns expressed were mostly about the possibility of additional requirements being placed on the CMAs in the transition process. For example, concern was expressed about the need to "recertify" or to pass the CA uniform final evaluation (UFE) in order for CMAs to qualify for the CA designation.

Some CMAs expressed concern that the lack of strategic focus in the CA program would mean that they would, in fact, lose some brand equity by switching to a CA designation (CMA Weblog, 2004). Others echoing this theme argued that this was a takeover by the CAs to overcome their limitations but without corresponding gains to the CMAs. This last point recognizes that access to public accounting roles is restricted by licensing legislation and nothing in the merger would change CMAs' access to licenses.

CMA-New Brunswick (McQuade, 2004) "dissociated" itself from the national merger announcement claiming that there had been a lack of consultation with the provinces. They wanted guarantees that the leadership program that CMA Canada had created would be included in the body of knowledge of the new association. This again points to the CMAs recognition of their unique competencies and concerns that the merger was a takeover that would undermine their distinctive strengths. In addition, CMAs in New Brunswick enjoyed public practice rights and they wanted assurances that the merger was not a way of withdrawing these rights from their members.

One of the surprises faced by CMA association executives was that many younger members felt that their designation was in fact superior to the CA designation. Historically, some members of the non-CA associations were those students who were unsuccessful as CA candidates. In recent times, however, students are choosing the CMA designation because of its focus on strategic management as opposed to the perceived compliance focus of the CA designation. These members were CMAs by choice not default and had integrated the CMA brand as part of their professional identities.

Reaction by other associations

The CGA Association used the merger negotiations as a way of promoting their designation claiming that their inclusive definition of accounting and streamed education program was the inspiration for the CA merger and proof of its success.

We believe that this latest round of merger talks between CA and CMA is in part a reaction to the success of CGAs in recruiting new students and increasing market share. In most provinces, we are training as many students to be professional accountants as the other two designations combined. (CGA Alberta, 2004)

The Institute of Chartered Accountants of Ontario acknowledges that its growth has become stagnant, and it is losing significant market share because of the inability to produce enough CA designates to meet the increasing demands for professional accountants. The CA designation has traditionally focused on audit and assurance, while the CMA designation has focused on management accounting. Presumably, a merged designation will be modelled somewhat on the existing CGA pre-certification model, which has always trained our professionals in the breadth of accounting, including audit and assurance, management and tax. (CGA Ontario, 2004)

Summary

The 2004 merger was seen as a strategic necessity for the CAs in order to maintain their membership numbers (to support the wide range of activities paid for by membership dues including financial reporting standard-setting as well as the association's infrastructure) and reposition their brand in line with changing market conditions. The merger with the CMAs is seen as diluting the CA brand equity but is regarded as a quick response to the problem that could otherwise be resolved by building a management accounting stream within the existing CA education program.

Unlike the CA/CPA merger, the CAs agreed to a co-branding policy for five years after the merger. This policy would allow the CAs to capitalize on the CMA brand equity, allow for students currently in the educational programs of both groups to finish their program under existing conditions, and reduce the potential alienation of members of both designations who may have resisted the merger. The co-branding agreement also indicates that the personal antipathies that marked the CA/CPA merger are not as prevalent in this case.

In common with the CA/CPA merger, the CAs are being asked by their association to "dilute" the prestige of their designation in order to improve the market position that would be enjoyed by future CA members. Unlike the CA/CPA merger however there is no immediate pay-off such as gaining control over public accounting licensing. For existing CAs therefore there is no compensation for the loss of integrity of their personal identity.

The CMAs, in general, regarded the merger as a status enhancing move and were supportive of the merger provided that it did not add further certification requirements. A significant minority of the CMAs were concerned that the merger actually detracted from their brand equity in the areas in which the CMA had specialized (strategic financial management). The CMAs have succeeded in developing a unique brand that has been integrated into the personal identities of members, particularly those who have entered under the new focus and education program of the Society.

Discussion

The Chartered Accountants have consistently promoted themselves both internally and externally as the best trained accountants in public practice. Further, public accounting has dominated accounting in industry such that this status hierarchy is reproduced in all areas of accounting practice (Richardson, 2002). The link between the CAs and public accounting however is limiting the evolution of the CA brand at a time when the audit market is contracting, risky and bears a social stigma from highly visible business and audit failures.

The proposal to merge the CAs and CMAs in 2004 occurred in similar circumstances to the CA/CPA merger in the 1960s.The CAs were losing market share and projections suggested that with the retirement of the baby boom generation and restricted intake, the association would actually decline in numbers over the next decade (Council of Senior Executives, 2004). Once again, the CAs were facing the possibility of being a "minority accounting association" (Cleather, 1961). Other key aspects of the two mergers are summarized in Table 1.

The two cases reviewed in this article however have different characteristics. The first merger was undertaken to secure control of the audit market and was reinforced by the state, who used the CA examination to grant licenses to practice. The merger was initiated within one province in response to specific local conditions and spread from there across the country. The merger was resisted by CAs who saw bringing less qualified accountants into membership as a dilution of the brand. This perception was so strong that during the transition, the CAs did not cobrand with the CPA designation but immediately eliminated the designation from use. The resistance of members to the merger was ultimately overcome by the clear benefits of gaining monopoly power in auditing. Although there was a cost to the existing CA members, the merger was essential to reinforcing their preconceived identity as auditors.

The second merger was again concerned with market power but in this case there were no guarantees. The CAs were attempting to maintain their status by repositioning and extending their brand into a space currently occupied by the CMAs. This merger was a "top down" effort in two respects. First, the merger was suggested by the senior executives of the association (that is full-time brand managers) rather than by individual members or elected representatives. Second, the merger proposal was initiated at the national level and subsequently "sold" to the provinces. In some cases, individual provincial associations publicly rejected the process due to a lack of consultation.

This merger was resisted by accountants on both sides of the merger proposal. The CAs again were concerned about dilution of their brand but the alternative was viable, that is they could maintain a high status brand image and be willing to be a smaller association. The merger in this case required existing CAs to refocus their identity away from auditing and onto financial management. There is evidence in both Canada (Gendron & Suddaby, 2004) and the USA (Fogarty et al., 2006) that public accountants are not comfortable with this change in their identity. The repositioning was really about maintaining the financial viability of the administrative structure that the CAs had created. The CMAs who resisted the merger recognized that there was nothing positive in the merger for them. The merger was largely being sold as a defense against future competition by a repositioned CA brand.

One of the clear indicators of the difference between the CA/CPA merger and CA/CMA merger was the willingness of the CAs to co-brand with the CMAs during the transition period. The CMA designation had valuable brand equity that the CAs were attempting to expropriate. Based on Ries and Ries' (1998) "22 mutable Laws of Branding", the CA/CPA merger would have improved the CA brand while the CA/CMA merger would not. The CA/CPA merger helped to focus the CA brand on public accounting; it made the CA name synonymous with auditing in Canada. The CA/CMA merger dissipates this focus and extends the'CA brand beyond its traditional market. The CA/CMA merger attempted to use the CA brand to convey information about too wide a range of product categories including auditing, tax advice and financial management. The CMA brand was simply a better brand in the intended market. As the CAs' own document shows, the CMA had established credibility in the minds of clients and practitioners as a brand concerned with strategic financial management.

Lawrence (2004, p.135) suggests that successful mergers between professional associations require, "the ability of the professional group to offer species of capital not readily available in the field as it is currently structured". In the CA/CPA merger the capital exchanged was social and professional status in exchange for monopoly control over a domain of practice. In the CA/CMA merger the CMAs were offering a well regarded and well-positioned brand (designation, education program and stream of candidates) while the CAs again were offering social and professional status. In this time period, however, the status differential between the CMA and CA brands was not perceived by CMA members to be a deciding factor and no other form of capital was offered by the CAs. The minimal condition for success of the association strategy appeared to be missing.

The phenomenon explored in this article is related to the work of Miranti on mergers within the early US profession and Walker and Shackleton on mergers (and attempted mergers) within the UK profession. In each of these cases, the two key dimensions on which associations were differentiated were social status and the identification of members with certain cultural heritages (for example native versus immigrant accountants in the USA and, among others, English versus Scottish accountants in the UK). In Canada these distinctions were less evident and yet the existence of a professional brand and the identification of accountants with their designation proved to be no less powerful in shaping the negotiations among associations. The common factor in all of these studies is the strength of identification of professionals with their professional bodies.

Low and Fullerton (1994) call for more attention to "the development of corporate brands and brand identity, especially within business-to-business and services contexts". This article provides some empirical evidence on issues in brand development in a professional service context. The key insight that we offer to this literature is on the role of the service provider in repositioning service brands. Although the marketing literature on services reflects an understanding of the differences between goods and services,1 ' the key difference identified here is that services deal with a self-aware product. This is particularly salient in the professions where practitioners own their brand through membership in professional associations and have internalized the brand as an important part of their personal identity. The power of professionals as a political force in brand repositioning exercises creates some rigidity in professional brands. This rigidity may impede the ability of professions to evolve at the same rate as changes in technology and in the market, opening the way to the development of new professions to fulfill emerging social needs.