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ACCT20074 Final Assignment

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ACCT20074 Final Assignment

ACCT20074 Final Assignment

 

Question1: Use Classical Political Economy Theory to explain JB Hi-Fi’sdecision to release its profit downgrade in the way it did. Make sure you explain what Institutional Theory is, and support your observations with evidence from the case study.

Explaining the downgrade of JB Hi- Fi downgrade by Classical political economy theory describing the institutional theory as the evidence of JB Hi- Fi downgrade case study

According to Keohane & Martin, (2014), a classical political theory is a concept used for interpreting and evaluating the events occurred and realized due to the institution and political events. The political theory is defined previously in two aspects, the philosophy of political theory and classical political thoughts. In classical political theory concept, the aspect is related to the story of ethics. The share of JB Hi-fi was a downgrade to 9 percent in the last week as presented by Richard Murray at the conference of Macquarie Australian. The heightened competition of JB Hi-Fi with a Good Guys had increased the sale and forced the company in trimming off the profit guidance of full year.

According to Haack & Schoenborn, (2015), the retailer of the JB Hi-Fi expected for making the profit of almost $240 million however it was declined by Good Guys in the next respected days by $230 million. The third sale brought by JB Hi-Fi in comparison to Good guys was downgraded by 2.0 percent in the last year and the sale at the end of financial year is increased by 0.3 percent.  The sales and the performances of the Good Guys had challenged the performance JB Hi-Fi in short-term the shares of Jb Hi-Fi was decreased by 2.29 percent or 9 percent in a lower outcome by $23.28 in the five months.

The institutional theory is the resilient structure and the concept related to social behavior. . The norms, schemes, and rules are the authority defining the behavior of the society. In the related case study the downgrade of JB Hi-fi, the net profit realized by the company is introduced by 3 percent of downfall. The ranges fall by $235-$240 million. The JB Hi-Fi was questioned by ASX for not providing the stand-alone announcement. The normative theory defines measurement should be taken for the changes in the downfall and does not consider much of the problem going on in the company for managing the time risk. The respondent did not expect the downgrade at the share price of JB Hi-Fi which had the materialistic effect on the respondent. 

Question 2: Use the Managerial branch of Stakeholder Theory to explain JB Hi-Fi’s reporting decisions. Make sure you support your observations with evidence from the case study.

The reporting decision of JB Hi-Fi, by using the managerial branch of stakeholder theory

The theory of stakeholder is highly realized for the theory of management. The implication had not been found coherent by the research. The theory is used to take a decision regarding the management of the company share and improving the downgrade of share.

As per Masuch et al. (2016), the positive theory of accounting shows the total contract of the company had entered with for the share investment. The success of the company is derived from the shares allocation and number of investor related to the company.  The shares of JB Hi-Fi had snaked by 10 percent after cut off by the consumer in large quantity in the year 2018 forecasting the company profit. The conference of 2018 released notifies the same situation that aroused in the year 2011 by the company as a great downfall of the share price as per ASX (Masuch et al. 2016). 

The conference at MacMurray in the fiscal year denoted the biggest fall of the single day by the company in 2011. The retailer of the company was thus questioned for not mentioning the downgrade into the stand-alone statement. The ASX issued the Guidance Note 8 to the company in sec 7.3 mentioning that the company must treat the transparent variation in expected return. The variation in earning is compared with the guidance in equal to or lowers than 5 percent which is not treated as materialistic. Thus the guidance of Note 8 sec 7.3 would not be required by the company in such case. After the profit realization, the net profit was decreased by 3 percent. According to the previous financial statements profit cut off is done. It is considered from the midpoint of the guidance of the National Political Awareness Test.

Question 3: To what extent do current share prices anticipate future earnings announcements? Use the case study to support your answer.

Explain the anticipation extent of the current price in the announcement of future earnings

According to Fuenfschilling & Truffer, (2014), the growth of the sales of JB hi-fi was 35.8 percent in the year 2016 and the representative percentage of total sale was 2.4 percent in 2015. The average visitor of the company was 1.3 million per week. The JB Hi-Fi had been dealing with the sale of double-digit structure and the earning by the year 2016 was also growing. The target aspired in the longer term was approx $500 million per annum achieved by the Jb Hi-Fi. The solution of JB Hi-Fi was the key responsible for the growth of future expectancy Fornell &  Hult, 2016).

The board has declared the fully franked dividend of 37 percent per share and brings up the total dividend of 2016 to prior 90 per share (cps). The information contained in the fiscal year of 2018 was not announced by Murray, which contains the outlook of the materialistic effect on the share price of company securities.

As per Berge & Ziemba, (2016), the case study it is considered that the downgrade of the share price was due to the competitive angle confronting by the Good Guys. The principle of Bruce Smith regarding the Investment Management at Alphinity stated that the shortfall of the share price of Jb Hi-Fi was shocking. The current price of the share is expected to bring the future earning for JB Hi-Fi. The company should observe that the share price move faster and in complicated behavior as per the market demand of the share. The revenue of JB Hi-Fi is increased by 41 percent in a record of 3.69 billion. The statutory profit of the company after tax is increased by 37.4 percent by $ 151.7 million. The Harvey Norman had downgraded in the retail stock recently by 3.4 percent and Meyer by 1.1 percent compared to Jb Hi-Fi.

Question 4: Show how the Brunswik Lens Model might be used to explain an investor's decision about whether to buy or sell shares in JB Hi-Fi following their downgrade“announcement”

Ways to show by which Brunswik Lens Model may be used for explaining a decision of investor:

The model of Brunswik Lens is a descriptive conceptualization of behavior of the investors that gives mathematical indices. With which the decision process of the investors can be studied. The research of announcement of downgraded shares related to selling and buying is based on this model.

According to Lin et al. (2014), the model of Brunswik Lens may be used for explaining the decision of investor about selling and buying of shares in JB HI-FI by the following ways:

Basic Information based on the announcement: Anytime an investor makes a decision at disposal, number of indicators and cues may not or may be used as process aid for buying or selling of shares. For an instant, the problem faced by an executive of the company in deciding how much X products units should be produced. According to Mates et al. (2016), there is the wide variety of variables of decisions like a present investor, decisions related to general market and current orders. Thus, this is the first way in which the model might be used for explaining the decision of the investor.

Decision observed based on the downgraded announcement: Any process of decision of the investors must be explained and might end in response to some sort even though the response is a decision based on not making any response in respect to buying and selling of shares. It is safer for the investors in stating that the buying and selling response has been made based on shares. The decision making of the investor always includes action choice in this model. Therefore, the behavior of decision and behavior of choice of sell or buy of shares is a phenomenon that is really indistinguishable.

Model’s Dynamics: The relationship between the elements of buying and selling of shares based on this model provides an indication of dynamic and complex features of the process of decision making by the investors. The validity of true cue of a single cue is available to investor’s decisions regarding the downgraded announcement of shares of the company. Correlation among the decision of the investors that is correct and the cue is an index that presents the information about sell or buys of shares.

Correct decision based on the announcement: This model helps in observing the action of the maker of decision that is the investors in this case. In this model, optimal response is associated with the representation of decision of the investors and also the choice of investor based on sale or buy of shares of the company. According to Giannetti et al. (2016), this decision of the investors presents the best potential decision or choice in respect to buy and sale of shares. This choice is made by the investors in a specific situation which is, in this case, the downgrade announcement. Thus, in the mentioned ways the model of Brunswik Lens could help to explain the process of decision of the investors. Therefore, it can be concluded that as the price of the share of the company has fallen as mentioned in the case study provided, the investor's decision to buy the share is not made.

Question 5: Some academics have criticised the accounting profession for acting to legitimise the capitalist system (supposedly by supporting the “haves” against the “have nots”. Indicate whether the case study supports the critical view of accounting, or whether it doesn’t. Use the case study to support your answer.

Indication if case study supports the view that is criticizing of the profession of accounting to act for legitimizing the system of capitalized.

Some criticism has been made by the academics regarding the profession of accounting to act for legitimizing the system of capitalist of the company. According to Katz et al. (2017), a warning of profit as mentioned in the case study regarded the shares of the company were lodged with the stock exchange of Australia. The critical review made by the academic was based on the sinking of shares of JB Hi-Fi Company to act for legitimizing the system capitalized. This sinking of shares of the JB Hi-Fi Company was based on the profit forecasting of giant cut of consumer electronics for the year of fiscal 2018. This critic as made as the downgrade of the shares of JB Hi-Fi Company shows the biggest fall of stock since the year 2011. The stock or the share of the JB Hi-Fi Company was marked as fall of the share which was biggest since past 7 years. The critical view in regard to the profession of accounting of the JB Hi-Fi Company has been made due to the downgraded profit of the company based on acting for legitimizing the system capitalized. The market of JB Hi-Fi Company that is downgraded was communicated and criticized based on questioning series by the academics blaming the profession of accounting of that company. The JB Hi-Fi Company was pushed for explaining the announcement related to the downgrade of the shares and why the company did not release a statement of stand alone. The criticizing of the profession of accounting of the JB Hi-Fi Company was based on the revised total profit after tax of the company which was decreased to 3 % from midpoint of previous guidance of NPAT of the Company.

Due to this critic of academics, the company should implement the new system of accounting that would help in capitalizing the associated cost of the shares and also impact the net income of the company. According to Moore et al. (2014), The Company with the help of legislating the system capitalizing can recognize the cost implied over the years. Based on the implementing nature, the company might capitalize the purpose of income increasing and developing the system of accounting implementation. The implication of the system of capitalization will help in the development of a new system of accounting by the company. Thus, the company should focus on improving the system of accounting to increase its total profit and also to rectify the old system of accounting. As the share price has been seen in the case study to be downgraded, the company must include the new system of accounting for overcoming the criticism of the academics regarding the profession of accounting of the company.

References

Reuters.com 2018 News Retrieved on 30th May from:

 

 

 

 https://www.reuters.com/finance/stocks/companyProfile/JBH.AX

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fornell, C., Morgeson III, F.V. & Hult, G.T.M., 2016. Stock returns on customer satisfaction do beat the market: gauging the effect of a marketing intangible. Journal of Marketing, 80(5), 92-107 Retrieved on 28th May 2018 from http://journals.ama.org/doi/abs/10.1509/jm.15.0229?code=amma-site

Fuenfschilling, L. & Truffer, B., 2014. The structuration of socio-technical regimes—Conceptual foundations from institutional theory. Research Policy, 43(4),.772-791. Retrieved on 28th May 2018 from https://www.sciencedirect.com/science/article/pii/S0048733313001893

Giannetti, M., & Wang, T. Y. (2016). Corporate scandals and household stock market participation. The Journal of Finance, 71(6), 2591-2636. Retrieved on 30th May from: http://ecgi.global/sites/default/files/working_papers/documents/SSRN-id2331588.pdf

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Haack, P. & Schoeneborn, D., 2015. Is decoupling becoming decoupled from institutional theory? A commentary on Wijen. Academy of Management Review, 40(2), 307-310.

Katz, L. F., Patterson, C., & Van Reenen, J. (2017). CEP Discussion Paper No 1476 April 2017 Concentrating on the Fall of the Labor Share David Autor, David Dorn. Retrieved on 30th May from: http://cep.lse.ac.uk/pubs/download/dp1476.pdf

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kent, P & Zunker, T., 2017. A stakeholder analysis of employee disclosures in annual reports. Accounting & Finance, 57(2), 533-563.

Keohane, R.O. & Martin, L.L., 2014. Institutional theory as a research program. The Realism Reader, 320. Retrieved on 28th May 2018 from https://books.google.co.in/books?hl=en&lr=&id=IfYABAAAQBAJ&oi=fnd&pg=PA320&dq=Keohane,+R.O.+and+Martin,+L.L.,+2014.+Institutional+theory+as+a+research+program.+The+Realism+Reader,+p.320.&ots=MuRvW8QfdI&sig=Z2MvR2wcgKQagVBhaij4hU-kyyE&redir_esc=y#v=onepage&q&f=false

Lin, H. C. K., Wu, C. H., & Hsueh, Y. P. (2014). The influence of using affective tutoring system in accounting remedial instruction on learning performance and usability. Computers in Human Behavior, 41, 514-522. Retrieved on 30th May from: https://www.sciencedirect.com/science/article/pii/S074756321400510X

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Martínez‐Ferrero, J., Garcia‐Sanchez, I. M., & Cuadrado‐Ballesteros, B. (2015). Effect of financial reporting quality on sustainability information disclosure. Corporate Social Responsibility and Environmental Management, 22(1), 45-64 Retrieved on 28th May 2018 from  https://onlinelibrary.wiley.com/doi/full/10.1002/csr.1330

Mates, D., Puscas, A., Ursachi, A., & Ajtay, E. (2016). The influence of accounting system regarding accounting and taxation of entities. Journal of legal studies, 17(31), 58-63. Retrieved on 30th May from: https://www.degruyter.com/downloadpdf/j/jles.2016.17.issue-31/jles-2016-0006/jles-2016-0006.pdf

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Moore, T., & Wang, P. (2014). Dynamic linkage between real exchange rates and stock prices: Evidence from developed and emerging Asian markets. International Review of Economics & Finance, 29, 1-11. Retrieved on 30th May from: https://bura.brunel.ac.uk/bitstream/2438/9830/3/Fulltext.pdf

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Retrieved on 28th May 2018 from  https://onlinelibrary.wiley.com/doi/abs/10.1111/acfi.12153

 

 

 

Schmidt, R., Zick, M., Schmidt, B. & Masuch, M., 2016, September. Success Factors for Applied Game Projects-An Exploratory Framework for Practitioners. In International Conference on Entertainment Computing (63-74). Springer, Cham.

 



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