The University of Southampton
Courses

MANG3030 Financial Analysis, Information and Markets

Module Overview

Capital markets require information in order to function effectively, for example in the valuation of firm shares and other financial securities. An important element of the available information, for example, concerns financial performance. However, the process of measuring a firm’s financial performance is inherently subjective. For example, the measurement of profit (earnings) is dependent on a variety of estimates surrounding the recognition and quantification of revenues and expenses and the recognition and valuation of assets and liabilities. Furthermore, firm managers and accountants have to make choices of equally acceptable accounting policies subject to a number of economic incentives of both the internal and external economic agents of a firm. In the context in which financial reports are prepared, the outcome of the reporting process is essentially a trade-off between multiple incentives, for example, of the information preparers and the needs of other economic agents external to the firm concerned. This can be a problem because external economic agents may not be able to directly observe the processes, judgements and incentives facing information preparers. Therefore, this module will provide you with the opportunity to learn how to evaluate the extent to which financial accounting and reporting processes produce relevant information. You will learn the incentives facing firms, managers and accountants in providing financial accounting and other related information to external users, and the techniques and procedures that external users may employ in processing the information.

Aims and Objectives

Module Aims

This module aims to develop your knowledge and understanding of the financial accounting information demands that firms face in capital markets and firms’ incentives in supplying this information. In ascertaining the firms’ incentives, you will be expected to learn the key factors that determine the production of financial accounting information. Additionally, you will have the opportunity to learn and apply the methods that external users can employ, using accounting data, in financial analysis and firm valuation, and in evaluating the relevance of financial accounting information in capital markets.

Learning Outcomes

Knowledge and Understanding

Having successfully completed this module, you will be able to demonstrate knowledge and understanding of:

  • the role of financial accounting information in the functioning of markets;
  • the incentives facing suppliers and users of financial accounting information
Transferable and Generic Skills

Having successfully completed this module you will be able to:

  • oral and written communication;
  • self-management;
  • numeracy;
  • problem-solving
Subject Specific Intellectual and Research Skills

Having successfully completed this module you will be able to:

  • employ appropriate analytical techniques in the use of financial accounting information;
  • assess influences underlying the preparation of financial accounting information.

Syllabus

• Demand and supply of financial accounting information. • The use of accounting data in financial analysis and firm valuation • Accounting earnings and share returns. • Value relevance of financial accounting information. • Economic consequences • Accounting policy choice. • Earnings management.

Learning and Teaching

Teaching and learning methods

Teaching methods include • The module will be lecture-based with supporting weekly classes. Learning activities include • In-lecture exercises and review questions/problems • In-lecture case studies discussion • Weekly individual/group presentations and discussion based on selected and topic specific academic papers. • Weekly in-class (workshop style) solving or discussion of exercises and review questions/problems and case studies.

TypeHours
Preparation for scheduled sessions22
Wider reading or practice30
Lecture22
Revision16
Follow-up work22
Seminar12
Completion of assessment task26
Total study time150

Resources & Reading list

Rees, B (1995). Financial Analysis. 

Deegan, C. and Unerman, J. (2011). Financial Accounting Theory. 

Watts, R. L. and Zimmerman, J. L (1986). Positive Accounting Theory. 

Mulfordm, C. W. and Comiskey, E. E (2005). The Financial Numbers Game: Detecting Creative Accounting Practices. 

Scott, W. R. (2014). Financial Accounting Theory. 

Assessment

Formative

Coursework

Summative

MethodPercentage contribution
Examination  (2 hours) 80%
Individual assignment  (1500 words) 20%

Repeat

MethodPercentage contribution
Examination  (2 hours) 80%
Individual assignment  (1500 words) 20%

Referral

MethodPercentage contribution
Examination  (2 hours) 100%

Linked modules

Prerequisites: MANG2064 (or MANG1001) and ECON1001 (or ECON1003)

Costs

Costs associated with this module

Students are responsible for meeting the cost of essential textbooks, and of producing such essays, assignments, laboratory reports and dissertations as are required to fulfil the academic requirements for each programme of study.

In addition to this, students registered for this module typically also have to pay for:

Books and Stationery equipment

Scott, W. R. (2014) Approx. retail price: GBP 95 (USD 154)

Deegan and Unerman (2011) Approx. retail price: GBP 50 (USD 82)

Please also ensure you read the section on additional costs in the University’s Fees, Charges and Expenses Regulations in the University Calendar available at www.calendar.soton.ac.uk.

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