Compare and Contrast Capital Market - 1897 Words

Contrast to Capital market research and Behaviour research Positive theories explain and predict the behaviour of users of accounting information: i)Reactions of investors to accounting information ii)Association between accounting numbers and share prices Capital market research and Behaviour research both positive theories. Research question: Capital market research investigates the impact of accounting information (especially earnings) on share prices. It is concerns with investor reactions to accounting information. Behaviour research explains how to use and process the accounting information. Objective: The main objective of capital market research is to examine relationship between accounting information and share prices. Behaviour†¦show more content†¦ii) Opportunistic perspective-three hypotheses, to increase managerial compensation: Bonus plan hypothesis: Managers of firms with bonus plans are more likely to use accounting methods that increase current period reported income; Debt hypothesis: The higher the firm’s debt/equity ratio, the more likely managers use accounting methods that increase income; Political cost hypothesis: Large firms rather than small firms are more likely to use accounting choices that reduce reported profits. Based on ‘scientific’ research. Large samples, statistics, hypothesis testing; aim = universal truth claims. Rational utility maximising individuals. Makes universal claims – ignores social context Focuses on relationships between various individuals and how accounting is used to assist in the functioning of these relationships. Origins of PAT – Agency Theory: i) Explains why the selection of particular accounting methods might matter; ii) Focus on the relationships between principals and agents. 2. Criticisms of PAT i) Only addresses relationship between managers and financial stakeholders (shareholders amp; debtholders) ii)Non-financial stakeholders are excluded as users of accounting info iii)Problem with rationality and utility maximisation PAT is not value-free as it asserts: Based on normative explanations of human behaviour -managers are rational,Show MoreRelatedBeacon Lighting Group Ltd : An Australian Lighting Company902 Words   |  4 Pagesoffices as well as selling the products online. Residential lighting market is mainly market for the company. This report includes four sections which are company’s capital market analysis, business analysis, management quality and corporate governance analysis and earning quality. In order to have a clear view, the report use some peer competitors to compare with the company. SECTION A: CAPITAL MARKET ANALYSIS Share Ownership From the tableRead MoreFin 370 Syllabus Essay examples1359 Words   |  6 Pagesreserved. Course Description This course introduces the student to the essential elements of finance for business. Emphasis is placed on financial management, financial markets, and the tools, techniques, and methodologies used in making financial decisions. Topics include: Financial planning, working capital management, capital budgeting, long-term financing, and international finance. Policies Faculty and students/learners will be held responsible for understanding and adhering to all policiesRead MoreWhy Do Business Internationalise?. International Trade1181 Words   |  5 Pages(traditional  international  trade  theory  and  new international trade theory) were compared and contrasted, in order to solve the puzzle that why nations export goods or do business abroad by analyzing whether benefits gained from international trade outweigh its cost. Compare and Contrast Among Traditional  International Trade Theories Traditional  international trade theories is represented by Adam Smith’s absolute advantage theory, David Ricardo’s comparative advantage theory and Heckscher-Ohlin’s factor endowment theory. TheyRead MoreUniversity of Phoenix Corporate Finance Syllabus1329 Words   |  6 PagesCourse Description This course applies corporate finance concepts to make management decisions. Students learn methods to evaluate financial alternatives and create financial plans. Other topics include cash flows, business valuation, working capital, capital budgets, and long-term financing. Policies Faculty and students/learners will be held responsible for understanding and adhering to all policies contained within the following two documents: University policies: You must be logged intoRead MoreCash Flow Analysis – Signal Cable Company Essay1573 Words   |  7 Pagesâ€Å"No-Hype approach resulted in one of the best price/performance ratio in the industry†. After Signal Cable had enjoyed quite a run up in profits over the past few years, the management decided to enter in the fiber optic communications business. The market was growing, the demand increased and the competition was not too severe. Eventually, the company established two additional manufacturing facilities and increased its inventory to meet the needs. Current Situation Despite Signal Cable had enjoyedRead MoreFinance: Net Present Value and Options Principle Objective1009 Words   |  5 Pagescorrectly completes the next sentence? The value of any asset is the present value of all future a. 0 profits it is expected to provide b. 0 revenue it is expected to provide c. 0 net working capital it is expected to provide d. 0 cash flows it is expected to provide Objective: Compare and contrast the market value of an asset or liability from the book value. 4. Original maturity refers to a. 0 a technical accounting term that encompasses the conventions, rules, and procedures necessary toRead MoreInvestment Vehicles For Emerging Muslim Economy1494 Words   |  6 PagesInvestment Vehicles for Emerging Muslim Economy: Which is which? Introduction Capital market play vital role in financial growth. Mutual fund is one of the securitization vehicles that commonly practice in today’s modern economics environment. Levy and Post (2005) mentioned investors, regardless of the type of investment they choose, have one common goal which is to get return out of their investment. Investors often have risk and return trade-off in determining their desire return. Thus, it isRead MoreDell Ratio Analysis1706 Words   |  7 Pagesthrough the life of the case, because HP acquired Compaq and almost doubled size of the company. In 2001, Dell’s ROA and ROE drop to the lowest point through the life of the case. This large drop is due to the net income declined (42.77%) in 2001 compare to 2000. In 2006, Dell’s ROA and ROE dropped almost 5% and 7%. This drop also is due to net income declined (27.69%) in 2006. In 2008 Dell’s ROA dropped 2% and ROE dropped 10%. This large drop is due to the recession in 2008. Using leverage toRead MoreUnited Nations Conference On Trade And Development1410 Words   |  6 PagesA developed country is a state that has a highly cultivated economy and advanced technological framework as compare to other under-developed nations. The extent of economic development can be assessed by observing the GDP (Gross domestic product), GNP (Gross national product) and Per Capita Income of a country. Few examples of developed countries are following: England, Italy, Spain, Australia, Japan ecectra. Whereas, a developing country, also known as a less-developed country, is a state thatRead MoreMba 640 Managerial Economics1427 Words   |  6 Pagesprice elasticity): Ford and Honda cater to the subcompact segment (marketing segmentation) of the automobile market with their Focus and Civic models, respectively. Are Ford Focus buyers more or less price sensitive than buyers of Honda Civics? One way to answer this question is to estimate the change in quantity demanded with a $100 increase in the price of each make. But this does not compare like with like. A more consistent way of comparing the price sensitivity of Focus and Civic buyers is to