A. OVERVIEW

The research assignment is a workbook that comprises of a newspaper article that demonstrate issue of relevance to accounting theory.

Weighting: 15%

Word Length: 500 words article (excluding the 100 word summary) with a 10% leeway.

1) ACCOUNTING THEORIES

Select an accounting theory that is relevant to each article:

· DO NOT invent a theory – you MUST only use the theories listed on this document. Note: the ‘market for lemons’ is NOT a theory.

2) ANALYSIS/REPORT

A word count MUST be included at the end of each section

For the article article, apply the chosen accounting theory in a report style format:

· Title of the Article and Article Reference Number (as shown in this document)

· Then, the four sections of your report, each with a word count at the end:

1. Summary (Part A):

· Summarise the article in a maximum of 100 words.

2. Accounting Theory (Part B):

· Identify and briefly describe the accounting theory that you will be using in this analysis. Use appropriate references. (Suggested word count = 100 words)

3. Analysis (Part C):

· Provide an analysis of the relationship between the theory and the newspaper article. Show how the facts of your article are directly related to the accounting theory chosen. Use references to support your arguments. (Suggested word count = 350 words)

4. Conclusion:

· Provide a brief conclusion. (Suggested word count = 50 words)

DO NOT reproduce the article– include only the title and number of the article.

Structure: Use a report format with sub-headings.

Written communication:

5. It is important to use sub-headings and short paragraphs to give clarity to your answer - clarity and succinctness* are what distinguishes the very good from the average case study (*succinctness means explaining the answer completely but concisely, i.e. in a relatively small number of words).

6. Allow time for overall editorial work on conclusion of the assignment (each person will have an individual writing style).

7. SPELLCHECK (English) and GRAMMAR check must be run prior to submission

8. English help is available to assist students with written communication. You can make weekly appointments –.

PLEASE ENSURE THE SUBMISSION IS TYPED, SINGLE-SPACED, AND APPROPRIATELY REFERENCED.

Choose ONE amongst these ACCOUNTING THEORIES

LECTURE TWO + SEMINAR TWO

· Public Interest Theory

· Capture Theory

· Private Interest Theory (Economic Interest Group Theory)

LECTURE FOUR + SEMINAR FOUR

· Efficient Market Hypothesis

LECTURE FIVE + SEMINAR FIVE

· Legitimacy Theory

· Stakeholder Theory [Two branches of Stakeholder Theory – (1) ethical (moral) and/or normative branch and (2) positive (managerial) branch]

LECTURE SIX + SEMINAR SIX

Positive Accounting Theory

· Positive Accounting Theory – opportunistic perspective OR efficiency perspective

· Political Cost Hypothesis

· Management Bonus Hypothesis - opportunistic perspective AND/ OR efficiency perspective

· Debt Hypothesis - opportunistic perspective AND/ OR efficiency perspective

3

http://www.ft.com/cms/s/0/2e0b11c0-e1fd-11e1-b3ff-00144feab49a.html#axzz3TaRrPDGQ

The scandal-hit Japanese camera maker sought to reassure investors over the state of its balance sheet after acknowledging that false accounting reports it submitted last year had put it in violation of loan agreements with its banks.

“We are in talks with our creditors over the continued provision of these loans, and at this stage we believe that they will continue to provide support,” Olympus said in a statement on Thursday.

It said it had broken the conditions of banking covenants covering Y320bn ($4.1bn) of long-term loans, or about half its interest-bearing debt.

Olympus said its net loss for the first quarter to June widened to Y4.5bn, from Y1.4bn in the same period last year, resulting in increased pressure on its finances.

The company has been reeling since late last year when it emerged that it had been hiding more than Y100bn of investment losses dating back to the 1990s. Several former executives have been arrested over the fraud .

Olympus’s disgrace, and the punishing effect it has had on the company’s share price, has made investors particularly sensitive to reporting problems at Japanese groups.

Shares in Japan’s Oki Electric , the telecoms equipment maker, fell sharply on Thursday. The 33 per cent fall followed revelations from executives that a Spanish sales unit had overstated revenues by Y8bn, or just under 2 per cent of this year’s projected sales for Oki as a whole.

Olympus’s shares fell as much as 80 per cent in the weeks after its accounting problems became public, and remain about 40 per cent below their pre-scandal price. They closed down 2.2 per cent on Thursday.

Olympus was already one of Japan’s most indebted manufacturing companies, and asset write-offs related to the scandal have eroded its capital base. In addition to negotiating with its bankers, it is in talks with several Japanese tech groups including Sony and Fujifilm, over a potential alliance.

The ratio of equity to total assets on Olympus’s balance sheet fell to 2.2 per cent as of the end of June from an already weak 4.6 per cent in March. Analysts say a comfortable level is about 20 per cent.

Several bankers joined Olympus’s board in a management shake-up this spring, including in the role of chairman – a development that gives creditors more control over the company, but also makes it less likely that they would abandon it for breaking its covenants.

Olympus blamed its widening net loss in the April-June quarter on declining sales of digital cameras and the impact of the yen’s rise against the euro, which reduced the value of European sales in yen terms. It said if exchange rates had been stable, sales would have fallen just 1 per cent instead of the 5 per cent it reported.

Sales of surgical endoscopes and other medical equipment – its most profitable area – rose 1 per cent in the quarter despite the exchange rate drag. But revenue from digital cameras, a perennially weak area, fell 16 per cent.

Olympus stuck by its forecast for a Y70bn net profit for the full fiscal year to next March.