Search
Search type

School of Social Sciences

Students outside a lecture theatre at The University of Manchester
BAEcon Economics
Learn how the social sciences can help you to understand today's world.

BAEcon Economics

Year of entry: 2018

Course unit details:
Share Prices and Accounting Information

Unit code BMAN30071
Credit rating 10
Unit level Level 3
Teaching period(s) Semester 1
Offered by Alliance Manchester Business School
Available as a free choice unit? No

Overview

Accounting numbers are regarded as being useful in evaluating alternative investments. The module reviews various theoretical models that have been adopted or proposed for calculating a firm's intrinsic value. These valuation models link share prices or returns to various items from the income statement and the balance sheet. Formal valuation models include the Simple Earnings Capitalisation Model, Option-Style Valuation Models and Abnormal Earnings Valuation Models. Valuation Models based on the Abnormal Earnings Valuation Framework are enjoying increasing popularity. The course also introduces the notion of earnings conservatism. Earnings Conservatism is closely linked with Share Price Anticipation of Earnings. Two lectures deal with the phenomenon of 'prices leading earnings'. The course also discusses why informational asymmetries between managers and outsiders can have an impact on the performance of various theoretical models. The final lecture deals with managers' incentive to manipulate accounting earnings and the implications of such manipulations for earnings-based valuation models.

Pre/co-requisites

Unit title Unit code Requirement type Description
Foundations of Finance A BMAN23000 Pre-Requisite Compulsory
Foundations of Finance B BMAN23000B Pre-Requisite Compulsory
BMAN23000(A) or (B) is a pre-requisite of BMAN30071.

Pre-requisite course units have to be passed by 40% or above at the first attempt unless a higher percentage is indicated within this course outline. If the pre-requisite unit is defined as a compulsory course unit within your programme of study (Maths with Finance, IBFE, Accounting, BA Econ pathways for example) then progression onto the dependent unit is permitted as long as you have gained the appropriate amount of credit to progress on to the following year of your registered undergraduate programme.

Pre-requisites: BMAN23000(A) or (B) Foundations of Finance

Co-requisites: None

Dependent course units: None
 

Aims

The course aims to increase students' knowledge of accounting-based valuation models. Students will learn how these models are constructed and how the validity of these models can be tested both by logical criticism and by empirical evidence.

Learning outcomes

On completion of this course unit, successful students will:
- have a knowledge and understanding of major accounting-based valuation models, including a familiarity with the seminal research papers in the area, and an understanding of the limits of such knowledge;
- have the ability to critically evaluate theories and evidence related to accounting-based valuation models;
- have a knowledge and understanding of the methodology that is employed in order to test these models empirically;
- be able to access relevant journal articles in major US/UK accounting journals and draw on them in critical consideration of arguments;
- be able to use communication and information technology (e.g. spreadsheets and word-processing) in acquiring, analysing and communicating information.

Teaching and learning methods

16 one hour lectures for 9 weeks (workshops and seminars included in lecture slots).

Total study hours: 100 hours split between lectures, classes, reading, self-study and preparation for classes, coursework and examination.

Informal Contact Methods
1. Office Hours

Assessment methods

2 hour examination (100%)

For semester 1 only exchange students admitted via the Alliance Manchester Business School International Office that take this course as BMAN30851 the assessment will be an 8 page research report

 

Feedback methods

Methods of Feedback to Students
- Informal advice and discussion during a lecture, seminar and workshops.
- Responses to student emails and questions from a member of staff.
- Generic feedback posted on Blackboard regarding overall examination performance.

Recommended reading

The course is based - to a large extent - on journal articles. The main journals of interest in this course are:
Journal of Accounting Research (JAR), Accounting Review (AR), Journal of Accounting and Economics (JAE), Review of Accounting Studies (RAS), and - to lesser extent - Journal of Business Finance and Accounting (JBFA) and Accounting and Business Research (ABR).
The first four journals are American journals; the other two journals are from the UK.

Some parts of the course are covered in the following two textbooks:

Barker, R. (2001), Determining Value: Valuation Models and Financial Statements, Harlow: Financial Times Prentice Hall.

Scott, W. R. (2003), Financial Accounting Theory, 3rd Edition, Toronto: Prentice Hall.

 

Study hours

Scheduled activity hours
Assessment written exam 2
Lectures 16
Independent study hours
Independent study 82

Teaching staff

Staff member Role
Thomas Schleicher Unit coordinator

Additional notes

Length of course: 10 weeks

Pre-requisite course units have to be passed by 40% or above at the first attempt unless a higher percentage is indicated within this course outline. If the pre-requisite unit is defined as a compulsory course unit within your programme of study (Maths with Finance, IBFE, Accounting, BA Econ pathways for example) then progression onto the dependent unit is permitted as long as you have gained the appropriate amount of credit to progress on to the following year of your registered undergraduate programme.

Pre-requisites: BMAN23000(A) or (B) Foundations of Finance
Co-requisites: None
Dependent course units: None

Programme Restrictions: There are no programme restrictions for this course providing the pre-requisites listed above are met.

BMAN30071 is available to study abroad and exchange students admitted through the University of Manchester International Programmes Office.

Timetable
https://ughandbook.portals.mbs.ac.uk/Myprogramme/Teachingtimetables.aspx

For Academic Year 2017/18

Updated: March 2017

Approved by: March UG Committee

Return to course details