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Article 1
代写英文论文  Accountant  作业代写
1.0 Summary
Article 1 demonstrates that there are many contradictories between the jumping share price and the previous supporting evidence, including the predicted auction that Blackberry is going to sell, the actual competitiveness in the smartphone market, the withered market share and the poor sale. That is because the market and corporation performance of Blackberry seemed to be out of expectation, but the market price of Blackberry was in a jumping trend.
2.0 Accounting Theory
In this analysis, this essay will choose efficient market hypothesis to discuss the newspaper article 1. Efficient market hypothesis includes weak efficiency, semi-strong efficiency and strong efficiency (Fama, 1969). According to the newspaper article, it can be seen that Blackberry is in a semi-strong form efficiency market, and the current share price sufficiently reflected the historical information and the public information. The rising price is explained by Blackberry’s auction wrapping despite the negative market performance.
3.0 Analysis
The semi-strong efficient market efficiency hypothesis helps explain why it is to investors’ surprise that the share price of Blackberry jumped while Blackberry was performing a bad smarkphone market recession. In the theory of the semi-strong efficient market efficiency hypothesis, the current share price can reflect the all the historical information, such as historical price, historical volume and returns, and documented information about Blackberry, including smartphone revenue, public expectation on Blackberry and the smartphone market shares. It investors seeks all the information quickly, they can correctly respond to the share price. In the semi-strong efficient market, the public or documented information is disseminated evenly and quickly, and the investors can soon adjust their investment decisions in a short time and the share price can be adjusted correspondingly.  But if investors want to earn supernormal profits from the stock trading, they have to generate more inside information (Raymond & Peter, 1978).
In this case, all the documented information implied that Blackberry is in a inferior place in the smartphone market and smartphone trading. And all the decreasing historical prices and trading volume indicated Blackberry may end up of selling and auction. But the investors can not estimate when the auction will be and they are unable to gather insider information of whether Blackberry would like to sell the company positively or negatively. So in the semi-strong efficient market, when share price was developing along with the historical information and documented information, part of the investors may be conservative and drop the Blackberry holding. For those who have the wait-and-see attitude, will actually be surprised with the rising share price of blackberry. That is because, the historical and documented information only explain the historical price till current. The sudden rise of Blackberry price can be only predicted by the intentions of well wrapping Blackberry. The wrapping performance of Blackberry is insider information, which will suddenly volatile the price and switch any trend of the originally current price based on the historical information and documented information.
Conclusively, the semi-strong efficient market can well explain the price jump of Blackberry. The current price can actually reflect the historical prices and documented information. But the information can not be used to predict price. Inside information help predict price and earn supernormal profitability.
4.0 Conclusion
In conclusion, this essay employs the semi-strong efficient market hypothesis to analysis the price jump of Blackberry. According to the theory, the inferior market performance of Blackberry and historical price information can be shown in the current price before the price jump. The unexpected price jump surprises investors because of the inside information of wrapping strategy.
 

 
Article 5
1.0 Summary
Article 5 mainly presents the debt performance of Fortescue Metals Group. Fortescue had high possibility of breaching the $10.4bn debt covenants and tried to obtain waivers on the covenants. The debt covenant performance led to share price decrease and possible downgrade from level BB- to the lower level. And the Chairman of the Board of Directors refused to introduce equity to balance debts, but transferred future interests to current interests in order to get through the trouble.
2.0 Accounting Theory
In the positive theories, there are three hypotheses, including bonus plan hypothesis, debt covenants hypothesis and political costs. In the case of Fortescue, the debt covenants hypothesis (Sweeney, 1994) in the positive theory will match the analysis. That is because the founder and chairman of Fortesue, Andrew Forrest, choose to transfer future retained earnings to the current interest when the company is close to the waivers of the $10.4bn of debts.
3.0 Analysis
代写英文论文  Accountant  作业代写
The debt covenants hypothesis emphasizes the debtor, who has high probability of breaching debt covenants, employs a beneficial accounting theory to transfer future accounting profitability to current interests. In the case of Fortescue, the Fortescue had a $10.4bn of debt covenant with the local banks but Fortescue would like to waivers on the debt for the next whole year so that he can have access o the funding lines. In order to boost the success negotiation of the waivers on debt covenants, the management of Fortescue has the following two actions. The action No. 1 is the profitability transformation. In this case, in order to beautify the balance sheet and preserve interest, Fortescue firstly reduced $1.9bn expenditures by downsizing 1,000 employees ton increase interest. Secondly, Fortescue reduced the costs of sale by postponing the big expansion project in new market when the coming interests are slow to come. In the third place, the management traded one of his power stations for $300m so that they could increase the other incomes. And finally, the Fortescue managers were persuading his investors into the sale of stake. All management of Fortescue wanted to do is to bring future interests to current financial statements and try to hold the confidence of the investors. What is more, they want to keep the best performance during their tenure so that they can maintain the highest performance bonus or personal interests. In the case, the founder, Andrew Forrest, also takes a place in the Board of Directors and actually orientates many business decisions on his own behalf (Bikki & Picheng, 2002).
The second action of Fortescue management is to refuse to introduce new equity capital into Fortescue. Considering the loan situation crisis that Fortescue was bearing, the Chairman of the Board did not try to introduce money to get through this tough situation but refuse to launch any equity fundraising because he was afraid to dilute his original 32% shareholding in Fortescue.
Based on the debt covenants hypothesis, the management of Fortescue was exactly performing the profitability transformation while debt covenant comes. What they have to do is not to figure out methods to pay off debts, but to implement any other solutions to maintain profitability, share price and their own interests.
4.0 Conclusion
In conclusion, this essay aims to utilizing the debt covenants hypothesis to analysis the management performance of Fortescue. It is supportive to use this theory to prove the when company is faced with closer debt covenants, and the management will make any endeavor to transfer future interests to current statements.
 
代写英文论文  Accountant  作业代写
 
Reference
Bikki, J. & Picheng, L. (2002), ‘Earnings Management Response to Debt Covenant Violations and Debt Restructuring’, Journal of Accounting, auditing & Finance, vol. 17, no. 2, pp. 4 295-324
Fama, E. F. (1969), ‘Efficient Capital Markets: A Review of Theory and Empirical Work’, The Journal of Finance, vol. 25, no. 2, pp. 383-417.
Raymond, M. L. & Peter, A. H. (1978), ‘A Semi-Strong Form Evaluation of the Efficiency of the Hog Futures Market’, Oxford Journal, vol. 61, no. 3, pp. 482-489.
Sweeney, A. (1994), ‘Debt Covenant Violations and Manager’s Accounting Responses’, Journal of Accounting and Economics, vol. 2, no. 17, pp. 281-308.