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The University of Southampton
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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

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 capital markets;
  • the incentives facing suppliers and users of financial accounting information.
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.
Transferable and Generic Skills

Having successfully completed this module you will be able to:

  • demonstrate skills in oral and written communication;
  • demonstrate skills in self-management;
  • demonstrate numeracy skills;
  • demonstrate problem-solving skills.

Syllabus

• The demand and supply of financial accounting information. • The use of financial statements in firm valuation and analysis. • Capital markets response to financial accounting information. • Capital market value relevance of financial accounting information. • Measurement approach to decision usefulness in capital markets. • Economic consequences of accounting policy choices. • Introduction to 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
Lecture22
Wider reading or practice30
Preparation for scheduled sessions22
Follow-up work22
Seminar12
Revision16
Completion of assessment task26
Total study time150

Resources & Reading list

Scott, W. R. (2015). Financial Accounting Theory. 

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

Penman, S.H. (2013). Financial Statement Analysis and Securities Valuation. 

Assessment

Formative

In-class activities

Summative

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

Repeat

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

Referral

MethodPercentage contribution
Examination  (2 hours) 100%

Repeat Information

Repeat type: Internal & External

Linked modules

Prerequisites: MANG1001 and (ECON1001 or ECON1003 or ECON1009)

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:

Textbooks

Recommended texts for this module may be available in limited supply in the University Library and students may wish to purchase the core/recommended text as appropriate. - Scott, W. R. (2014) Approx. retail price: GBP 95 (USD 154) - Deegan and Unerman (2011) Approx. retail price: GBP 50 (USD 82)

Recommended texts for this module may be available in limited supply in the University Library and students may wish to purchase the mandatory/additional reading text as appropriate.

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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