David Jones Annual Profit Report 2011

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David Jones Annual Profit Report 2011

Executive Summary:
After a profit announcement was made by David Jones Ltd, it is the objective of this report to note whether there was an impact of such information on investor behaviour via the share prices of this company. To ensure that the information found was accurate, the effect of the All Ordinaries was taken into consideration and comparisons were made between David Jones and its two main competitors. After analysing the closing share prices before and after the date of the announcement, it was found that share prices reduced more than that of the general stock market and also more than that of its main competitors. This report concludes that the announcement of accounting information by David Jones had a significant effect on investor behaviour and can either increase or decrease confidence in the company. Report:

The key objectives of this report is to discover if announcements made by David Jones (David Jones Annual Report, 2011) had a positive, negative or no impact on share prices depending on the nature of the announcement. Through observations on the closing share prices 3 weeks before and 3 weeks after the announcement was made by David Jones, the information was compared to its two main competitors in the retail industry, Myer and Harvey Norman. Removing the effects of the All Ordinaries further added to the accuracy of the report to ensure that the overall prices in the stock market were not having an effect on the outcome. This was done by calculating the cumulative residual of the shares for each company and comparing them in the graph provided (Figure 1). On the 28th of October 2011, David Jones, one of Australia’s retail giants, released their annual profit report on the ASX website, in which it showed that sales in 2011 were lower than those of 2010(David Jones Annual Report 2011, p03). Adding to this decline it was also added that the -10.3% growth rate in the 4th Quarter of 2011 was...
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