a) Australia's biggest bank’s announcement of annual profit has climbed to a new record of profit.
Explain the contents of this announcement in relation to the information perspective and in terms of Signalling theory
b) Commonwealth Bank’s announcement of increasing profit is a strong signal of the firm’s earnings prospects. Other comments in the article emphasise that signal. What could Commonwealth Bank do to strengthen the signal in relation to its profits even further
c) What factors might increase the credibility of the signal provided by Commonwealth Bank’s announcement and media attention? What factors might decrease the credibility of this signal? Give at least three factors for each answer.
d) What do you expect would have been the impacts of the record earnings on management compensation contracts
(Salary Package) of Commonwealth Bank? Explain your reasons.
e) Not all information is reported in this manner. Explain what motivates managers to disclose information voluntarily?
f) What factors instigate voluntary disclosure by management in annual reports?
g) Why would managers voluntarily disclose environmental performance information in annual reports? How can positive accounting theory explain corporate, social and environmental reporting?