Case analysis: Johnson & Johnson and the COVID-19 vaccine

Abstract

Research methodology This paper uses financial report information to analyze the accounting results of the COVID-19 vaccine development for Johnson & Johnson (J&J). This paper also uses stock price information to analyze the market reactions to the COVID-19 vaccine development and the state of clinical trials for J&J. Case overview/synopsis This instructional case investigates the interaction between J&J and the COVID-19 vaccine. This paper uses information from financial reports to analyze the accounting results of the COVID-19 vaccine development for J&J. This paper also uses stock price information to analyze the market’s reactions to the COVID-19 vaccine development and the state of clinical trials for J&J. Complexity academic level This case has been used in both undergraduate and graduate levels to highlight the application of accounting theories to practice and improve the understanding of financial statements, especially when Covid-19 has affected the global economy. Under this new context, students could explore new ideas from accounting aspect. Learning objectives The case aims to investigate the interaction between J&J as a pharmaceutical company and COVID-19. It provides a context in which to discuss the consequences of COVID-19 vaccines from several financial perspectives, such as stock prices, accounting policies, earnings and cash flows: LO1: Understand the responses of stakeholders to J&J’s COVID-19 vaccines. LO2: Understand the accounting policies that J&J and its competitors follow regarding COVID-19 vaccines related to revenues, R&D expenditures and government funds. LO3: Apply Ball and Brown’s theory to the impact of COVID-19 vaccine development on earnings quality of J&J and its competitors. LO4: Assess the importance of COVID-19 vaccines in management decision-making through dividend policy and management compensation structure.