JB Hi-Fi’s Strategy of Profit Downgrade Announcement
Question 1: Use Classical Political Economy Theory to explain JB Hi-Fi’s decision 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.
Answer: Your answer is written here. Evaluating the decision made by JB Hi-Fi under the lens of Classical Political Economy Theory directly indicates the viable option conducted by the company. The Classical Political Economy Theory directly indicates the minimum involvement of government regulation on operations of the company. After evaluating the case study, it could be understood that JB Fi-Hi has used adequate announcement to declare their profit downgrade, where all the relevant rule was being maintained and followed by the organisation. Therefore, the announcement release made by JB Hi Fi was in accordance with the Classical Political Economy Theory.( Frieden, 2018)
The institutional Theory mainly indicates that organisations should maintain and follow all the relevant regulations for supporting their social activities. Therefore, companies need to comply with the rules and regulations laid down by exchange and regularities. The announcement made by JB Hi Fi is under the rules and regulation made by ASX, where the material misstatement more than 5% needs a separate announcement. Hence, the announcement made by JB Hi Fi is adequate and under the rules and regulation made by ASX, while it is supported by the institutional theory. The statement given by Bruce Smith also indicated the viable measure used by JB Hi Fi in announcing their profit downgrade (Lamb & Weiner, 2018).
Marker’s Comments: The marker will provide feedback here. Mark (10):
(High Distinction) 85-100% Exceeds Expectations (Distinction) 75 – 84% Meets Expectations
(Credit) 65 – 74% Meets Expectations
(Pass) 50 – 64% Below Expectations
(Fail) below 50%
Demonstrates a balanced and very high level of detailed knowledge of core concepts by providing a very high level of analysis. Utilises current, appropriate and credible sources. Demonstrates a balanced and high level of knowledge of core concepts by providing a high level of analysis. Utilises mostly current, appropriate and credible sources. Demonstrates a good level of knowledge of some of the core concepts by providing some level of analysis. Utilises some current, appropriate and credible sources. Demonstrates limited knowledge of core concepts by providing a limited level of analysis. Utilises few current, appropriate and credible sources. Demonstrates little, if any, knowledge of the core concepts with extremely limited, if any, analysis. Utilises little, if any, current, appropriate and credible sources.
Political Economy Theory Analysis
Quality of writing at a very high standard. Paragraphs are coherently connected to each other. Correct grammar, spelling and punctuation. Quality of writing is of a high standard. Paragraphs are mostly well structured. Few grammar, spelling and punctuation mistakes. Quality of writing is of a good standard. Few grammar, spelling and punctuation mistakes. Some problems with sentence structure and presentation Frequent grammar, punctuation and spelling mistakes. Use of inappropriate language. Quality of writing is at a very poor standard so barely understandable. Many spelling mistakes. Little or no evidence of proof reading.
The assessment presents a detailed and focused summary of the ideas presented; drawing clear and well thought-out conclusions. The assessment presents a fairly detailed and focused summary of the ideas presented; drawing fairly clear and well thought-out conclusions. The assessment presents a somewhat detailed and focused summary of the ideas presented; providing some evidence of conclusions. The assessment provides limited detail with no clear summary of the ideas presented; drawing limited conclusions. The assessment fails to provide any clear evidence of the ideas presented; drawing no clear conclusions.
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.
Answer: Your answer is written here. The Managerial Branch of Stakeholder Theory directly indicates that organisation needs to provide all the relevant information to a particular stakeholder for heling them grow and obtain sustainable growth. Hence, from the evaluation it could be identified that JB Hi Fi has provided all the relevant information in the announcement for their shareholders, which helped in portraying their future prospects and income during the fiscal year. In accordance with Managerial Branch of Stakeholder Theory, JB Hi Fi has adequately provided all the relevant information to their shareholder regarding it current financial position. The positive delivery of information to the adequate stakeholders was the main reason behind the rapid decline in share value of JB HI Fi after the announcement. This relevantly indicates that JB Hi Fi adequately takes the measure in delivering all the relevant information regarding its current and future performance to its shareholders, as per the Managerial Branch of Stakeholder Theory. In this context, Hussain, Rigoni & Orij (2018) stated that companies with the help of announcements are able to deliver the adequate information regarding their progress and decision, as per the ASX regulations. Therefore, the decision made by JB Hi fi in disclosing the relevant information of profit downgrade is adequate, which helps ion delivering adequate information to the shareholders.
Stakeholder Theory Analysis
Marker’s Comments: The marker will provide feedback here. Mark (10):
Exceeds Expectations
(High Distinction) 85-100% Exceeds Expectations (Distinction) 75 – 84% Meets Expectations
(Credit) 65 – 74% Meets Expectations
(Pass) 50 – 64% Below Expectations
(Fail) below 50%
Demonstrates a balanced and very high level of detailed knowledge of core concepts by providing a very high level of analysis. Utilises current, appropriate and credible sources. Demonstrates a balanced and high level of knowledge of core concepts by providing a high level of analysis. Utilises mostly current, appropriate and credible sources. Demonstrates a good level of knowledge of some of the core concepts by providing some level of analysis. Utilises some current, appropriate and credible sources. Demonstrates limited knowledge of core concepts by providing a limited level of analysis. Utilises few current, appropriate and credible sources. Demonstrates little, if any, knowledge of the core concepts with extremely limited, if any, analysis. Utilises little, if any, current, appropriate and credible sources.
Quality of writing at a very high standard. Paragraphs are coherently connected to each other. Correct grammar, spelling and punctuation. Quality of writing is of a high standard. Paragraphs are mostly well structured. Few grammar, spelling and punctuation mistakes. Quality of writing is of a good standard. Few grammar, spelling and punctuation mistakes. Some problems with sentence structure and presentation Frequent grammar, punctuation and spelling mistakes. Use of inappropriate language. Quality of writing is at a very poor standard so barely understandable. Many spelling mistakes. Little or no evidence of proof reading.
The assessment presents a detailed and focused summary of the ideas presented; drawing clear and well thought-out conclusions. The assessment presents a fairly detailed and focused summary of the ideas presented; drawing fairly clear and well thought-out conclusions. The assessment presents a somewhat detailed and focused summary of the ideas presented; providing some evidence of conclusions. The assessment provides limited detail with no clear summary of the ideas presented; drawing limited conclusions. The assessment fails to provide any clear evidence of the ideas presented; drawing no clear conclusions.
Question 3: To what extent do current share prices anticipate future earnings announcements? Use the case study to support your answer.
Answer: Your answer is written here. After evaluating the case study, the share price of JB Hi Fi can be evaluated, which indicates the future earnings announcements of the company. In addition, the decline in share price of JB Hi Fi by 10% due in the first day of trading after the announcement directly indicates viability of the future earnings announcements conducted by the company. The drastic decline in share price after the announcement of profit downgrades directly indicates the low financial position of the company in achieving low profits during the fiscal year. The evaluation also indicates that the announcement made by the organisation regarding the decline in future profits is directly affecting the share price of the organisation, which is why drastic decline in its valuation was seen during the announcement date. In addition, the continuous decline in share price of the company was mainly witnessed from 25.7 per share to 22.05 per share (Asx.com.au, 2018). This relevantly supports the future earnings announcement that was conducted by the company regarding the profit downgrade, as share price of the company is continuously declining and portraying viability of the announcement conducted by JB Hi Fi. Thus, it could be understood that the current share prices of the JB Hi Fi adequately anticipates the future earnings accountment of the company
Impact of Announcements on Share Prices
Marker’s Comments: The marker will provide feedback here. Mark (10):
Exceeds Expectations
(High Distinction) 85-100% Exceeds Expectations (Distinction) 75 – 84% Meets Expectations
(Credit) 65 – 74% Meets Expectations
(Pass) 50 – 64% Below Expectations
(Fail) below 50%
Demonstrates a balanced and very high level of detailed knowledge of core concepts by providing a very high level of analysis. Utilises current, appropriate and credible sources. Demonstrates a balanced and high level of knowledge of core concepts by providing a high level of analysis. Utilises mostly current, appropriate and credible sources. Demonstrates a good level of knowledge of some of the core concepts by providing some level of analysis. Utilises some current, appropriate and credible sources. Demonstrates limited knowledge of core concepts by providing a limited level of analysis. Utilises few current, appropriate and credible sources. Demonstrates little, if any, knowledge of the core concepts with extremely limited, if any, analysis. Utilises little, if any, current, appropriate and credible sources.
Quality of writing at a very high standard. Paragraphs are coherently connected to each other. Correct grammar, spelling and punctuation. Quality of writing is of a high standard. Paragraphs are mostly well structured. Few grammar, spelling and punctuation mistakes. Quality of writing is of a good standard. Few grammar, spelling and punctuation mistakes. Some problems with sentence structure and presentation Frequent grammar, punctuation and spelling mistakes. Use of inappropriate language. Quality of writing is at a very poor standard so barely understandable. Many spelling mistakes. Little or no evidence of proof reading.
The assessment presents a detailed and focused summary of the ideas presented; drawing clear and well thought-out conclusions. The assessment presents a fairly detailed and focused summary of the ideas presented; drawing fairly clear and well thought-out conclusions. The assessment presents a somewhat detailed and focused summary of the ideas presented; providing some evidence of conclusions. The assessment provides limited detail with no clear summary of the ideas presented; drawing limited conclusions. The assessment fails to provide any clear evidence of the ideas presented; drawing no clear conclusions.
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”.
Answer: Your answer is written here. The decision made by investors regarding the buying or selling of JB Hi fi shares can be evaluated under Brunswik Lens Model, which evaluates reactions and ques of the investors. In addition, the measures also help in authenticating the decision a was made by shareholder of JB Hi Fi after hearing relevant accountment of profit down grade (Kaminski & Sporer, 2018). Moreover, the announcement conducted by JB Hi Fi is mainly considered a negative attribute for the organisation, where profits of the company will eventually decline in in near future. This decline in profits of the company by 3% will directly have negative impact on return generation capability of the investors. This is the main reason behind the decline in share price of the company, where future earnings anticipation of JB Hi Fi is directly indicating a reduction in profits by 3%. The Brunswik Lens Model directly evaluates the accounting information provided by the JB Hi fi, which indicates a decline in profits of the company. The reaction of the investors was relevantly seen in the same day, where the massive selling of share incurred and declined its share value by 10%. Hence, investors were keen on selling the shares of JB Hi Fi according to the Brunswik Lens Mode
Marker’s Comments: The marker will provide feedback here. Mark (10):
Exceeds Expectations
(High Distinction) 85-100% Exceeds Expectations (Distinction) 75 – 84% Meets Expectations
(Credit) 65 – 74% Meets Expectations
(Pass) 50 – 64% Below Expectations
(Fail) below 50%
Demonstrates a balanced and very high level of detailed knowledge of core concepts by providing a very high level of analysis. Utilises current, appropriate and credible sources. Demonstrates a balanced and high level of knowledge of core concepts by providing a high level of analysis. Utilises mostly current, appropriate and credible sources. Demonstrates a good level of knowledge of some of the core concepts by providing some level of analysis. Utilises some current, appropriate and credible sources. Demonstrates limited knowledge of core concepts by providing a limited level of analysis. Utilises few current, appropriate and credible sources. Demonstrates little, if any, knowledge of the core concepts with extremely limited, if any, analysis. Utilises little, if any, current, appropriate and credible sources.
Quality of writing at a very high standard. Paragraphs are coherently connected to each other. Correct grammar, spelling and punctuation. Quality of writing is of a high standard. Paragraphs are mostly well structured. Few grammar, spelling and punctuation mistakes. Quality of writing is of a good standard. Few grammar, spelling and punctuation mistakes. Some problems with sentence structure and presentation Frequent grammar, punctuation and spelling mistakes. Use of inappropriate language. Quality of writing is at a very poor standard so barely understandable. Many spelling mistakes. Little or no evidence of proof reading.
The assessment presents a detailed and focused summary of the ideas presented; drawing clear and well thought-out conclusions. The assessment presents a fairly detailed and focused summary of the ideas presented; drawing fairly clear and well thought-out conclusions. The assessment presents a somewhat detailed and focused summary of the ideas presented; providing some evidence of conclusions. The assessment provides limited detail with no clear summary of the ideas presented; drawing limited conclusions. The assessment fails to provide any clear evidence of the ideas presented; drawing no clear conclusions.
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.
Answer: Your answer is written here. After evaluating the all the relevant information, it could be identified that the case study complies and support the critical view of accounting. From the evaluation it could be identified that the company is mainly using accounting professions in addressing its future profits. This relevantly indicates that the company is able to depict the anticipated decline in its profits during the fiscal year with the help of accounting professionals who aims in legitimating the capitalist system. The anticipated profits are not always correct, which is depicted by the company, whereas changes in the current valuation could be conducted. However, the accounting profession directly conducts operations for legitimising the capitalist action conducted by business. The actions of the accountant relevantly declined the future progress, which is considered as the capitalist actions conducted by the company. During the financial crisis the accoutring professionals were mainly responsible for manipulating the annual report and projecting wrong financial performance. Gao et al., (2018) stated that the manipulations conducted by accoutring professionals led to the liquidation of Lehman Brothers, which nearly disclosed the financial sector of the world. Thus, it could be understood that the current case study supports the critical view of accounting where it supports haves against the have nots.
References:
Kaminski, K. S., & Sporer, S. L. (2018). Observer judgments of identification accuracy are affected by non?valid cues: A Brunswikian lens model analysis. European Journal of Social Psychology, 48(1), 47-61.
Asx.com.au. (2018). Asx.com.au. Retrieved 30 May 2018, from https://www.asx.com.au/asx/share-price-research/company/JBH
Insert your references here, for example:
Gao, Y. C., Tang, H. L., Cai, S. M., Gao, J. J., & Stanley, H. E. (2018). The impact of margin trading on share price evolution: A cascading failure model investigation. Physica A: Statistical Mechanics and its Applications, 505, 69-76.
Frieden, J. A. (2018). Modern political economy and Latin America: theory and policy. Routledge.
Lamb, A. J., & Weiner, J. M. (2018). Extending the Research on 1: 1 Technology Integration in Middle Schools: A Call for Using Institutional Theory in Educational Technology Research. Middle Grades Review, 4(1), 3.
Hussain, N., Rigoni, U., & Orij, R. P. (2018). Corporate governance and sustainability performance: Analysis of triple bottom line performance. Journal of Business Ethics, 149(2), 411-432.
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