On the Usefulness of Operating Income, Net Income and Comprehensive Income in Explaining Security Returns

1993 ◽  
Vol 23 (91) ◽  
pp. 195-203 ◽  
Author(s):  
C. S. Agnes Cheng ◽  
Joseph K. Cheung ◽  
V. Gopalakrishnan
Keyword(s):  
Net Income ◽  
Operating Income ◽  
Comprehensive Income ◽  
Security Returns

scholarly journals HOW WELL DOES COMPREHENSIVE INCOME MEASURE FUTURE FIRM PERFORMANCE COMPARED TO NET INCOME? EVIDENCE FROM TURKISH LISTED FIRMS

2016 ◽  
Vol 3 (3) ◽  
pp. 309-326
Author(s):  
Ahmet Özcan
Keyword(s):  
Firm Performance ◽  
Financial Performance ◽  
Relevant Information ◽  
Net Income ◽  
Return On Equity ◽  
Operating Income ◽  
Listed Firms ◽  
Comprehensive Income ◽  
Future Return ◽  
Better Than

The financial performance of the firms is one of the major concerns for the users of financial statements. Accounting standard setting bodies have encouraged firms to report comprehensive income which is believed to have much more value relevant information than traditional net income. The objective of this paper is to assess the usefulness of comprehensive income and net income in explaining future firm performance. Based on a sample that includes 102 non-financial firms, the empirical analysis indicates that there are advantages of reporting comprehensive income in predicting corporate financial performance. According to the empirical evidences, net income is better than comprehensive income in predicting future net income and operating income, while comprehensive income is better than net income in predicting future return on assets and return on equity.

scholarly journals HOW WELL DOES COMPREHENSIVE INCOME MEASURE FUTURE FIRM PERFORMANCE COMPARED TO NET INCOME? EVIDENCE FROM TURKISH LISTED FIRMS

2016 ◽  
Vol 3 (3) ◽  
Author(s):  
Ahmet Özcan
Keyword(s):  
Firm Performance ◽  
Financial Performance ◽  
Relevant Information ◽  
Net Income ◽  
Return On Equity ◽  
Operating Income ◽  
Listed Firms ◽  
Comprehensive Income ◽  
Future Return ◽  
Better Than

The financial performance of the firms is one of the major concerns for the users of financial statements. Accounting standard setting bodies have encouraged firms to report comprehensive income which is believed to have much more value relevant information than traditional net income. The objective of this paper is to assess the usefulness of comprehensive income and net income in explaining future firm performance. Based on a sample that includes 102 non-financial firms, the empirical analysis indicates that there are advantages of reporting comprehensive income in predicting corporate financial performance. According to the empirical evidences, net income is better than comprehensive income in predicting future net income and operating income, while comprehensive income is better than net income in predicting future return on assets and return on equity.

Value Relevance of Earnings Component in the Financial Industry

2021 ◽  
Vol 1 (3) ◽  
pp. 358-364
Author(s):  
Retno Yulianti ◽  
Zuhrohtun Zuhrohtun
Keyword(s):  
Stock Prices ◽  
Value Relevance ◽  
Stock Exchange ◽  
Net Income ◽  
Financial Industry ◽  
Operating Income ◽  
Comprehensive Income ◽  
Income Statement ◽  
Other Comprehensive Income ◽  
Negative Effect

PSAK No. 1 of 2009 is enforced from 2011 onwards. The presentation of the income statement changes to a comprehensive income statement consisting of operating income, non-operating income, net income, other comprehensive income (OCI). The purpose of this study was to test the value relevance of OCI and other components of earnings that were tested based on the relationship between OCI and stock prices in the financial industry. The population in this study are all companies listed on the Indonesia Stock Exchange which are included in the financial industry in 2016-2019. Based on the determination of the sample using the purposive sampling method, the research sample obtained was 335 firm years. The data is processed using OLS regression. This study indicates that OCI, non-operating income, and comprehensive income have value relevance which is indicated by the negative effect of OCI on stock prices and the positive effect of non-operating income and comprehensive income on stock prices. However, operating income and net income have no effect on stock prices.

DİĞER KAPSAMLI GELİR KALEMLERİ İLE İŞLETMENİN PİYASA DEĞERİ ARASINDAKİ İLİŞKİ

2014 ◽  
Vol 1 (3) ◽  
pp. 269
Author(s):  
Serhan Gürkan ◽  
Yasemin Köse
Keyword(s):  
Financial Performance ◽  
Value Relevance ◽  
Net Income ◽  
Comprehensive Income ◽  
Income Statement ◽  
Other Comprehensive Income ◽  
The Difference ◽  
Gains And Losses

Other comprehensive income is the difference between net income as in the Income Statement and comprehensive income, and represents the certain gains and losses of the enterprise not recognized in the Profit or Loss Account. Value relevance of other comprehensive income is under discussion and considering other comprehensive income items all together might be misleading for financial performance. In the view of such information, discussing the value relevance of each other comprehensive income item, judgements are made.

Risk-Relevance of Fair-Value Income Measures for Commercial Banks

2006 ◽  
Vol 81 (2) ◽  
pp. 337-375 ◽  
Author(s):  
Leslie D. Hodder ◽  
Patrick E. Hopkins ◽  
James M. Wahlen
Keyword(s):  
Standard Deviation ◽  
Stock Returns ◽  
Commercial Banks ◽  
Fair Value ◽  
Net Income ◽  
Income Volatility ◽  
Expected Return ◽  
Market Pricing ◽  
Share Prices ◽  
Comprehensive Income

We investigate the risk relevance of the standard deviation of three performance measures: net income, comprehensive income, and a constructed measure of full-fair-value income for a sample of 202 U.S. commercial banks from 1996 to 2004. We find that, for the average sample bank, the volatility of full-fair-value income is more than three times that of comprehensive income and more than five times that of net income. We find that the incremental volatility in full-fair-value income (beyond the volatility of net income and comprehensive income) is positively related to marketmodel beta, the standard deviation in stock returns, and long-term interest-rate beta. Further, we predict and find that the incremental volatility in full-fair-value income (1) negatively moderates the relation between abnormal earnings and banks' share prices and (2) positively affects the expected return implicit in bank share prices. Our findings suggest full-fair-value income volatility reflects elements of risk that are not captured by volatility in net income or comprehensive income, and relates more closely to capital-market pricing of that risk than either net-income volatility or comprehensiveincome volatility.

scholarly journals Value relevance of accounting data and financial crisis in Europe: an empirical analysis

2012 ◽  
Vol 2 (2) ◽  
pp. 201 ◽  
Author(s):  
Alain Devalle
Keyword(s):  
Financial Crisis ◽  
Positive Impact ◽  
Value Relevance ◽  
Net Income ◽  
Accounting Data ◽  
Book Value ◽  
Crisis Period ◽  
Comprehensive Income ◽  
The Impact ◽  
The Relationship

This paper aims at verifying the relationship between book value and  market value for a four years period (2006-2009) in Europe, under IFRS. In particular, I used value relevance approach to measure whether net income or comprehensive income are more useful to understand the relationship between market data and financial data. Moreover, the paper analyzes the impact of financial crisis on the value relevance of accounting data. The examination period runs from a pre-crisis period (2006-2007) to an in-crisis period (2008-2009). Results shows that comprehensive income is more value relevant than net income. Furthermore, the financial crisis has a positive impact on value relevance.  

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