Effect of releasing accounting information

Effect of releasing accounting information 

The objective of this task is to demonstrate the effect of releasing accounting information concerning profits on the valuation (i.e. share price) of an Australian-listed company. The project has three educational objectives:

i.To demonstrate that, in some cases, accounting-related information has an impact on investor behaviour via the share prices (or returns, which are changes in share price).
ii.To show how we have to control for the effects of other factors when trying to assess causal relationships. In this case, movements in the market must be controlled for in order to see the real effect of a company profit announcement on the share price of the company.
iii.To encourage initiative, inquisitiveness and the development of basic financial statement analysis skills as students investigate company-specific factors behind the economic performance being announced by the company.

Requirements

This is an individual task that is designed to build your research, analysis and writing skills. This project will require you to use online databases to search and obtain announcements by companies, share price histories for companies and market wide information.

You will also utilise the key business desk top analysis tool, “Excel”, to manipulate the data you obtain to calculate, analyse and produce graphical representations of the key information.

You may like to refer to the course textbook by Horngren Accounting (8th Ed.), giving emphasis on the contents of Chapter 18 Financial Statement Analysis, to evaluate and put into context the factors behind the profit results announced by the company.

Suggested Structure of Report

1.Title page

2.Objectives of the report

3.Industry and Company Overview

4.Overview of the announcement and expected impact
Introduce the announcement, give a succinct summary of the key financial and, if applicable, non-financial elements.·
Provide a justified expectation of the impact of the announcement on your company’s share price (up or down, good news/ bad news etc). Be sure to discuss what YOU THOUGHT should happen based on the announcement and not a rationalisation of what did happen·

5.A discussion and analysis of the actual stock market reaction and calculation of residuals.
What actually happened around the date the announcement was released to the share price of your company and its competitors.·
Use your residual calculations to support your observations.·
Explain what the residual graph is presenting to the audience.·
This section will include the presentation of your cumulative residual graphs with a discussion on their importance and usefulness.·
If not what was expected, what are some reasons for the difference?·
You can include information from company announcements, reports, news articles, graphs etc. to support your discussion.·
Any graphs that appear within the body of the report require appropriate formatting and labels.·
You do not need to include tables of formulas from Excel in your written report.·

6.Conclusion
Your conclusion should address your report’s objectives and be fully supported by your report content. Do not introduce new ideas in the conclusion.·

Other factors affecting your grade include:

7.References and appendices
APA style is preferred. Referencing guides can be found at: http://www.bond.edu.au/library/tools/cite/index.html·
Your attention is drawn to the faculty’s plagiarism policy, which is accessed through the Bond website.·
Appendices are graphs, tables and other supporting data that are supplementary to the main discussion but do not belong in the main body of the report.·

8.Presentation and writing style
Is your report appropriately formatted, written and presented (for example, 12 point font, 1.5 line spacing)?·
Does the report have a suitable flow and structure?·
Have you used the correct terminology and vocabulary in context?·
Are your graphs, tables, pictures and/or figures readable, labelled and used appropriately?·
Have you corrected minor errors in your report during the proof reading process?·

Project Requirements Checklist
Your project consists of your written report (Word document) covering the items as shown above.
It should be 1.5 line spaced, referenced and formatted appropriately.
You are required to use an Excel file for calculations and for the generation of graphs. Note: only ONE Excel file is to be submitted, but it must contain all the worksheets needed for this project. Clearly label each worksheet tab within the file. You must use formulae for all calculations.
Name your PDF copy of the profit announcement article (displaying the date and source) with the name of the company the announcement refers to. Place a copy into your report as an Appendix if possible.
There are TWO submission procedures to be carried out:

1. SafeAssign:
Submit a digital copy of your report (Word document, .doc or .docx ONLY) to SafeAssign via the link on the iLearn course page, found under the “Assessment” tab.
EVERYONE MUST SUBMIT THEIR REPORT VIA SafeAssign. EMAIL COPIES WILL NOT BE ACCEPTED.

2. iLEARN DROPBOX under ASSESSMENT on iLearn:
Submit your assignment files (PDF copy of report, Excel, PDF copy of the announcement and any other material you deem necessary) via the Assignment link in iLearn, found under the “Assessment” tab.
Before submission, check first that you have all the required files, named as instructed above, and that you have only ONE excel file containing all of the downloaded data and calculations.
(If you have any problems with this submission process, then email all of your files to your Instructor before the deadline. Reports will still have to be submitted through SafeAssign but they will be checked against your email submission.)

Useful Resources

Suggested sources to find out more information about the profit announcement and mind map.
Factiva (newspaper database)·
Accessed via Bond website: https://library.bond.edu.au Library / Electronic Resources / Business / Factiva.

Search major Australian and NZ newspapers using key words to find relevant profit articles. (Note: this database can be tricky and you are advised to seek a librarian’s assistance).

Australian Stock Exchange (www.asx.com.au)·

Bloomberg·
Library – 3 terminals
Macquarie Trading Room – 12 terminals
Building 6 Room 4_07 – 14 terminals

Mainstream and Financial Press·
For example:
oThe Financial Review
oThe Australian
oBrisbane Times (brisbanetimes.com.au)
oNews.com.au

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