Select an accounting theory that is relevant to each article

DO NOT invent a theory you MUST only use the theories listed on page 5 of this document.

ACCOUNTING THEORIES

LECTURE ONE

• Positive Theories (too broad to use for assignment need to pick a specific theory)
• Normative Theories (too broad to use for assignment need to pick a specific theory)
  • True Income Theory
  • Decision Usefulness Theories
    • Decision-makers emphasis
    • Decision-models emphasis

LECTURE TWO

• Public Interest Theory
• Capture Theory
• Private Interest Theory (Economic Interest Group Theory)

LECTURE FOUR

• Efficient Market Hypothesis
• Market reaction to accounting or non-accounting information

LECTURE FIVE

• Legitimacy Theory
• Stakeholder Theory (Two branches of Stakeholder Theory - ethical (moral) or normative branch and positive (managerial) branch
• Institutional Theory

LECTURE SIX Positive Accounting Theory

• Agency Theory, Contracting Costs and Firm Value
• Positive Accounting Theory Efficient contracting and managerial opportunism
• Political Cost Hypothesis
• Bonus Plan Hypothesis
• Debt Hypothesis

Article 4 Ramsay Health Care (RHC) John McDuling 184 words 30 August 2011 The Australian Financial Review AFNR First 26 English Copyright 2011. Fairfax Media Management Pty Limited. Shares in Australia's largest private hospital operator are up 27 per cent in the past 12 months, easily outperforming the broader market, which has fallen about 4 per cent over the same period. Investors last Thursday pushed the stock 4.2 per cent higher after the company reported a 2011 net profit of $198.4 million, a 34 per cent increase on the previous year, on revenues of $3.72 billion, a 9.4 per cent increase. Strong performances across its Australian hospitals and greater contributions from brownfield developments drove the result, it said. The stock is trading on a multiple of more than 15 times 2012 earnings, above the broader market average of about 12 times, but below the healthcare sector average of more than 20 times. Politics represent one risk to the share price, with changes to private health insurance rebate having the potential to reduce its customer base. Citi estimated a 1 per cent change to health tariffs in the UK could reduce earnings per share by the same amount. Article 6 Forecast grim as CSR earnings, share price in free fall PHILIP WEN 413 words 13 July 2012 The Sydney Morning Herald SMHH First 3 English 2012 Copyright John Fairfax Holdings Limited. www.smh.com.au BUILDING THE building materials supplier CSR has warned investors that Australia's weak construction market and low aluminium prices will continue to drag on its profits but defended management's performance despite its shares trading at 27-year lows. The chairman, Jeremy Sutcliffe, said both residential and commercial construction markets remained under siege, housing starts falling 13 per cent in the March quarter. "Our core Australian residential and commercial construction markets are under extreme pressure, despite strong underlying demand for housing," Mr Sutcliffe told the company's annual meeting yesterday. With the weakness expected to persist, the chief executive, Rob Sindel, said the company's earnings were likely to be weighted towards the second half. He forecast housing starts of about 135,000 for the year ending March 2013, down from 148,000 the previous year. Buffeted by the high Australian dollar, persistently weak construction markets and the introduction of the carbon tax, CSR shares have been in free fall, losing 46 per cent in the past year to trade near historic lows. The falling price of aluminium has had a particular recent impact on the company's share price. While some shareholders were sympathetic to the factors largely out of the company's control, most were angered at the company's poor performance. One shareholder sarcastically congratulated management for the company's share price performance and questioned whether the board's remuneration policies would be reviewed. "It is ... a fair question to ask whether our remuneration practices are appropriate in a year when earnings were down 26 per cent and the share price fell 46 per cent," said Mr Sutcliffe, who oversaw the sale of the group's sugar business in December 2010 for CSR to become purely a building player. The much debated carbon tax was also a hot issue for concerned shareholders at the meeting. CSR has been one of the more vocal industry critics of the tax. "The reality is any tax is a bad tax when we're operating in an increasingly regulated and internationally competitive world that we live in," Mr Sutcliffe said. CSR's glass business Viridian - the subject of repeated writedowns since its acquisition in 2007 - has continued to bleed money in the face of vicious competition from vastly cheaper imports, mainly from China. Shares in CSR fell 3, or 2.4 per cent, to $1.20 yesterday