QUESTION-1 Determining Community Expectations- The role of attitudinal surveys Health rates as top social issue Canberra: Health has taken over from crime as the most important social issue seen to be facing Australia, figures showed yesterday. The survey of people's views of environmental issues found the environment rated fifth in importance---even though three in four Australians had at least one environmental concern. The ABS figures showed 29% of respondents believed health was the most important social issue. This was followed by crime (24%) , education and unemployment (both 16%) and environmental problems (15%) In 1996, crime was seen as the most important social issue , followed by the rest. In the latest dated March 1998, health was the most important issue to older people and least important to people aged 35-44. In general, younger people were more concerned about long-term environmental problems although 18-24 year olds , as well as 45-54 year olds , were most concerned about unemployment. But the survey said 71% of Australians were concerned with at least one specific environmental problem. The figure was up from 68% in 1996 but down from 75% in 1992. People living in the ACT were most concerned while Tasmanians were the least concerned about environmental problems. Air pollution continued to be the problem of greatest worry for Australians with 32% reporting it as their major concern. REQUIRED: Would you expect management to worry about attitudinal surveys, such as the one described above? Explain your answer, as well as explaining how such surveys might impact on the disclosure policies of an organization. QUESTION-2 In July 2005 many newspapers articles discussed how the fast-food giant McDonald's in Australia was reducing its use of Australian farm produce ( particularly potatoes) in favour of cheaper overseas imports. A review of McDonald's Australia's website (Sept.2005) revealed a media release entitled " Setting the record straight on recent media coverage". It was presented in a question and answer format. The questions McDonald's posed to itself were: - Is McDonald's planning to dump Australian farmers? - I hear McDonald's is going to import beef and orange juice. - Is it true that McDonald's doesn't treat its farmers fairly? The answers provided to each of these questions indicate that the various concerns were unfounded. (a) Explain McDonald's reaction in terms of Legitimacy Theory. (b) Do you think that McDonald's would be considered to have a great deal of 'legitimacy' to protect through such disclosures? QUESTION-3 Babcock and Brown had negotiated an agreement with lenders that its market capitalization would not fall below an agreed amount of S7.50 per share. However, the share price dipped below this agreed amount, meaning that the lenders could demand repayment of the funds if they choose to invoke their right to do so. From Positive Accounting Theory perspective, why would Babcock have agreed to this market capitalization requirement rather than other tangible assets? Further, why would the banks have negotiated to have this market capitalization agreement included within the debt agreement?