Accounting Theory
Das Auto Case by Angela Tan-Kantor and Christine Jubb both of Swinburne University of Technology

THE CASE
•Background History and Current Status

•Sales and Market Share

•VW Group Stock Market Listings

•Emissions Scandal

•How was VW Group Exposed?
European discrepancies

•Results from United States testing

•Effect of the Emission Scandal on VW Share Price

•Health Effect

•Consequences and Fines

•References

Required: Case Questions

You are asked to prepare a response to the case study questions below. Research for this assignment can be commenced soon after the commencement of semester, but coverage of Topics 7-9 will help in applying the relevant theories. It is expected that you will use at least four scholarly research articles from journals included in the Australian Business Deans' Council (ABDC)1 2013 list to support your application of relevant theories to the case questions.

Your response is to be written as a report of 1,500 words2 (plus or minus the usual 10 per centbeyond this you will be penalised) to the Chair of Australia's Financial Reporting Council that addresses the following questions, not necessarily in the sequence listed below.

That is, you are to structure your report in the way that you see fit, being sure to include content that addresses the following questions whilst also using at least four scholarly research articles from the ABDC list.

Question 1
(i) Consider whether VW Group has broken the terms of its social contract. Apply specific systems-based theories to predict what actions you would expect VW Group management will undertake in periods subsequent to the scandal in terms of its financial  accounting disclosure practices.

(ii) Apply relevant systems-based theories to explain the reaction of VW Group management following media announcements of the emissions scandal.

(iii) Use specific systems-based theories to explain the reaction of other companies within the automobile industry following the emission scandal that disclosed environmental pollution.

Question 2
(i) Discuss why and how the share market reacted and its implications for VW Group's share price following the company's media announcement of the emissions scandal.

(ii) Does the market reaction to Volkswagen Group's media announcement imply market efficiency or inefficiency? Elaborate.

Question 3
Explain and discuss using a specific accounting theory or theories why the share prices of other automobile companies changed following VW's share price change.

Question 4
Consider the following annual report content: "VW Financial Services AG looks back on a successful year of business of 2014. We were able to improve on all key figures and once again made a significant contribution to the financial result of the VW Group with a profit of €1.3 billion.

As planned, our company achieved growth in three dimensions, that is with the brands of the VW Group, international expansion into new markets and the introduction of successful products in existing markets" (VW Annual Report 2014, p. 3).

It appears that one of the worst environmental polluters is also one of the most profitable companies. Consider and discuss some of the problems that occur with the use of "profit" as a unit of measurement of a company's success.

Attached is the Case:

Attachment:- Case- Accounting Theory.rar