NAB Bank And Theories

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Question :

ACC5216 Accounting Theory Semester 2, 2017

Assignment 1

Important Information

The course specification requires that your submission is your own individual work. You are strongly urged to complete this assessment yourself to receive clear feedback about your level of understanding of the course material. You will find information regarding plagiarism and academic misconduct, such as collusion and cheating in the course specification and on the USQ website.

The course specification also contains information about

  • Assignment late policy
  • Assignment extension policy

Please ensure that any ideas or data that you provide in your answer, other than your own original thoughts are properly referenced using the Harvard referencing style. A link to the university’s Harvard referencing style page is provided here.

The bibliography in not included in the word count.


This assignment is a research based essay where you are required to relate a real world case study to accounting theory. Below you will find a news article relating to the announcement by the National Australia Bank (NAB) indicating a very high profit, and also announcing the losses of 6,000 jobs. Whilst this article provides the context for this assignment, you need to ensure that you also refer to other sources. You also need to incorporate both academic and non-academic articles but must have at least 10 academic references from which you will refer to theoretical issues. (Please make sure that you know what an academic reference is).

Using the news article provided below as a base, and referring to other appropriate literature, discuss and critically evaluate the following:

  • Determine the facts of the case.
  • Identify and discuss why the NAB is planning to remove 6,000 jobs. What are the possible issues faced by the banks?
  • Describe the main stakeholders who will be affected by the job cuts? Describe each stakeholder, their concerns and how they are likely to be effected.
  • Using Stakeholder Theory, explain the likely motivations for the each stakeholder group (basing your discussion on your application of Stakeholder Theory).
  • Using a second accounting theory, explain how your chosen theory applies to the NAB case, and what each group should do as a result of following the theory. (Make sure you relate your discussion to the NAB case and each of the affected groups under your chosen theory).
  • Compare and contrast the different theories and identify which of these theories is most important from the banks perspective and explain reasons why you think your chosen theory is the most important.
  • YOU MUST relate your answers to the link between theory and practice
  • Finally, you may apply a third accounting theory that you believe may also be relevant to this case study. You may do this if you feel it will help you to compare and contrast the similarities and differences between the theories.

The relationship between accounting research and professional practice has been discussed in the literature (Parker, Guthrie & Linacre 2011). This article needs to inform your arguments.

The essay should include an abstract, introduction, body, conclusion and bibliography. Maximum word count is 1400 words not including the abstract or bibliography.

The article will appear as a file below this task sheet.

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Answer :

NAB Bank and theories


With the advent of twenty first century all the things have metamorphosed. The globalization pace has brought sea changes in the entire world and the recent digitization’s have also affected the various industries in many ways. The report is forced on the banking industry and how the banks have to deal with the issues of laying off the employees with the changes in the technology. The report has taken the aid of stakeholder and agency theory to make the application of the concepts easy. Towards the end, suggestions are also given to the bank so that best can be obtained from the situation.


The report discusses through the example of NAB bank that how various theories of accounting work.  The report commences with the discussing a recent article news which states that NAB is planning to remove about 6000 jobs and it highlights the main stakeholders who would get affected by these job costs. The report then highlights with the use of the stakeholder theory and agency theory that what steps can be taken by the bank so that the interest of all the parties involved can be protected in a better way. There is a need on the part of the bank to look for ways in which the employees could be made felt as important part of the business.

Facts of the case

NAB has announced of job cuts of 6000 and this is done due to the effect of the digital transactions and the new technology in the world. This has forced the bank to reshape their entire workforce. The article discusses the various perspectives as to how such a decision by the bank is going to effect the bank and the related parties to it.

Possible issues faced by the bank

The issues which are being faced by the bank is the change in the entire set up and the main effect is being caused by digitalization which would need the dependency on less number of people by the bank. The workforce would have to be cut and instead on their place new digitally focused position would be created and these all the cost cutting measures would probably help the bank in reaping savings of abbot 1 billion$ by the year 2020.

Stakeholders affected by the job cuts

The main stakeholders who would get affected by the job cuts would be the employees whose jobs would get cut, The bank itself and the customers. The employees would get affected the most those who would have to leave their jobs as if they would not be given time to look for some job elsewhere so they would have to suffer from huge financial losses. Besides this the bank would get benefited as such job cuts is expected to increase huge profits to the bank in the form of savings and this would eventually help the bank to generate more profits and this would help the management to get more profits for the business. The bank would also be able to expand a sit would be left with more money to invest in the business (Bonnafous-Boucher and Porcher, 2010). The customers would also in advantageous position as the processes of the bank would get simplified as they would increasingly get digitized and customers can also expect the bank to update itself digitally to keep up with the changing technology needs. The chances of human error would also be reduced and better prospects of bank can be generated.

Stakeholder theory

The stakeholder theory is a theory of the business ethics and organizational management which helps in addressing the values and morals in the management of the organization. The business decisions which are taken have to be such that they are able to protect the interest of the stakeholders of the organization as a collective group. The decision must be taken so that the decision making of the all the voices of the stakeholders can be optimized (Crane and Ruebottom, 2010).  A company has majorly three major stakeholders in any organization which includes the customers, employees and shareholders. The decision of NAB has effected the interest of all the stakeholders and the most importantly the employees have been affected in a negative manner. This helps in getting a comprehension about the goal conflict between the employees and the firm and how to help the firm to overcome the resistance which are suffered from the employees.

Agency theory

Agency theory is the another accounting theory which helps in advising different solutions so that the alignment of the employee’s interest with that of the firm can be aligned and this allows then to work on a common ground and help to achieve the goals (Cots, 2011). It helps in getting an understanding of the solutions like for the establishment of the incentives for the employees so that they can be motivated for the goals of the principal and it also involves the meriting and the observing the behavior of employees and helps in monitoring the behavior outcomes of each of the person. It helps in finding solutions (Argandoña, 2011).

Similarities and dissimilarities among theories

Agency theory is considered to be more biased theory as the solution obtained in this are more for the firm’s interest and this increases the satisfaction level of employees as generally the employees are expected to compromise their personal interest and goals. So this is considered as one sided theory as it engages in the potential neglect and exploitation of the employees. Then the next problem in this is that it doesn’t consider get irregularities and the external forces. The stakeholder’s theory is a theory which helps in getting a justified and realistic solution to solve the conflict of goals which take place between the employees and owners. It considers the real situations of the markets and helps in suggesting according to them (Rampling, 2012). The firms exist not only to satisfy the needs of the stakeholders and this theory helps in maintaining a balance between the conflicting interest of all the stakeholders involved. But still this theory has its own disadvantages like its inability to provide the standards for thee giving weights to the interest of the stakeholders. It even doesn’t incorporate the optimal contracting idea and even the firms are not able to follow clear cut apaches. So no one particular theory can be suggested in the ace of NAB and both the theories agency and stakeholder theory can help in solving the problem (Morales and Martin, 2018). They both would help in finding solutions so that the interests of the both the parties which are employees and the firm ca be taken care of so that the resistance of the employees can be overcome. A combination of theories is vital as this would help the bank in coming out at an answer so that the interests off the maximum shareholders involved can be protected.

Combination of theories

The insights of the agency theory have to move with the stakeholder theory and this would help in getting more suitable solutions as per the current firm (Lamont, Kennelly and Weiler, 2015). As the bank has decided to lay off about 6000 employees, they can even consider providing them training so that the employees get a chance to upgrade their skills and develop thermoses as per the requirements of the bank. Such a move would help the bank in taking care of the employees. In the existing case a tradeoff has to be sought between the efficiency maximization and the growth rate of the company so that all the parties involved get an equal chance to achieve their goals. So the third theory is proposed to come up with a centered approach and even this solution doesn’t seem good in the short term period but this could help in producing a win-win situation for the all the concerned parties in the long term period. There is a need for the keeping and creation of a dynamic and flexible balance among all the concerned stakeholders (Steurer, 2005). The bank has taken a right decision by reducing the purchasing power of the customers by providing them better product through innovation but at the same time the must come forward and use the agency theory in which the firm and the employees would come to know about the need and importance of each other and this would help the concern to move closer to their goals (Schlueter, 2007).

goal achievements of firm

The firm must try to make use of the employees so that their personal goals can meet with the goals of the bank bad this would help the bank in active corporation from the bank employees for the goal achievement (Al-Nasser Mohammed and Muhammed, 2017).


The report has presented a comprehensive insight about how the companies must try to make decisions keeping in mind the interests of all the stakeholders. The case of NAB bank has bene used where in the face of digitization, the bank has made decision to lay off 6000 employees. The report has tried to discuss the agency and the stakeholder theory in the most descriptive manner and towards the end, a solution is suggested in which a combination of both the theories is suggested to be applied in the case of the bank.