Enhanced Disclosure of Other Comprehensive Income and Increased Value Relevance of Net Income: The Impact of Accounting Standards Update 2011-05

2017 ◽  
Author(s):  
Linna Shi ◽  
Ping Wang ◽  
Nan Zhou
Keyword(s):  
Value Relevance ◽  
Accounting Standards ◽  
Net Income ◽  
Comprehensive Income ◽  
Other Comprehensive Income ◽  
The Impact

scholarly journals Presentation Pattern and the Value Relevance of Comprehensive Income --- Evidence from China

2017 ◽  
Vol 9 (6) ◽  
pp. 31 ◽  
Author(s):  
Wenjing Xu ◽  
Ming Qi
Keyword(s):  
Financial Reporting ◽  
Information Disclosure ◽  
Value Relevance ◽  
Accounting Standards ◽  
Accounting Standard ◽  
Financial Reporting Standards ◽  
Comprehensive Income ◽  
Other Comprehensive Income ◽  
The Impact

In 2006 the Chinese Ministry of finance(CMF) issued new accounting standards that required companies began to present comprehensive income information in the statement of equity. In 2009 and 2014, CMF changed the comprehensive income presentation pattern consecutively twice, from the equity statement pattern to the performance statement transition pattern, and then to the single performance statement. The purpose of these changes is to harmonize China Accounting Standard (CAS) with International Financial Reporting Standards(IFRS). It also aims to enhance the usefulness of comprehensive income information by improving the transparency of information disclosure. From the perspective of presentation patterns, the paper examines the influence of presentation pattern changes on the value relevance of comprehensive income (CI), and on other comprehensive income (OCI). The results show that, under the equity statement pattern, neither CI nor OCI was correlated with value. Under the performance statement transition pattern, both CI and OCI have the value relevance. Under the single performance statement pattern, the CI has higher value relevance, while the OCI does not reflect higher value relevance. This study reveals the impact of comprehensive income presentation pattern on the usefulness of decision making. It has certain inspiration and reference for improving the quality of accounting standards and financial reporting.

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.

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.  

scholarly journals Value Relevance of net income, other comprehensive income, and comprehensive income in Brazil

2020 ◽  
Vol 21 ◽  
pp. 1-22
Author(s):  
Cassiana Bortoli ◽  
Alcido Manuel Juaniha ◽  
Jorge Eduardo Scarpin ◽  
Nayane Thais Krespi Musial ◽  
Claudio Marcelo Edwards Barros
Keyword(s):  
Stock Returns ◽  
Regression Models ◽  
Value Relevance ◽  
Standard Errors ◽  
Positive Contribution ◽  
Net Income ◽  
Control Variables ◽  
Gross Domestic Product Growth ◽  
Comprehensive Income ◽  
Other Comprehensive Income

This paper uses the Ohlson Model to analyze whether Net Income (NI), Other Comprehensive Income (OCI), and Comprehensive Income (CI) are value relevant for market value and the return of shares of publicy-traded Brazilian companies. To maximize the robustness of the results, we inserted the following control variables for each model: equity per Share (EqPS), Size (S), Industry (I), EBITDA per Share (EbPS), Revenue per Share (RePS), Liquidity (L), and Gross Domestic Product Growth (GDPG). The control variables S, RePS, and GDPG were significant for the three models related to the value of the company. The control variables EqPS, EbPS, RePS, and L, on the other hand, were only significant for the three models related to stock returns. Our main variables (NI, OCI, and CI) were found to be statistically significant in five of the six regression models after data analysis in a fixed effect panel using robust standard errors. However, only the variables NI and CI were considered to be relevant in the expected direction, meaning that they offered a positive contribution in explaining the value of the company.

The Value Relevance of Components of Other Comprehensive Income When Net Income Is Disaggregated

2016 ◽  
Vol 19 (04) ◽  
pp. 1650027 ◽  
Author(s):  
Taisier A. Zoubi ◽  
Feras Salama ◽  
Mahmud Hossain ◽  
Yass A. Alkafaji
Keyword(s):  
Stock Returns ◽  
Value Relevance ◽  
Net Income ◽  
Comprehensive Income ◽  
Equity Pricing ◽  
Other Comprehensive Income

The purpose of this study is to examine the equity pricing of other comprehensive income when earnings are disaggregated into several components. Our findings indicate that other comprehensive income can better explain variation in stock returns when net income is reported in a disaggregated form. Additionally, we find that disaggregating both net income and other comprehensive income can explain more of the variation in the stock returns than the two summary components of comprehensive income. Our results survive a series of robustness checks.

scholarly journals Properties of Accounting Income in Indonesia: Net Income and Total Comprehensive Income

2018 ◽  
Vol 7 (3.21) ◽  
pp. 261
Author(s):  
Dwi Fitri Puspa ◽  
Listiana Srimulatsih ◽  
Zaitul .
Keyword(s):  
Value Relevance ◽  
Stock Exchange ◽  
Accounting Standards ◽  
Sampling Technique ◽  
Financial Accounting ◽  
Net Income ◽  
Manufacturing Companies ◽  
Comprehensive Income ◽  
Significant Difference

Introduction- This study aims to investigate the quality of net income and total comprehensive earnings from four properties or characteristics. The characteristics in question are persistence, variability, predictability and value relevance. The samples of the research are manufacturing companies listed in Indonesian Stock Exchange in 2012. By employing sampling technique based on the criteria, 24 companies were selected as samples with period of data collection from2012 to 2014. There are six hypotheses tested by using regression technique. The results of the research show some findings, namely that net income is more persistent than total comprehensive income, there is no significant difference in the variability between total comprehensive income and net income, net income has the ability to predict cash flow and net income for the upcoming year is better than the total comprehensive income and the relevance of net income is different from the total comprehensive income both by applying price and return model. IFRS convergence financial accounting standards require companies that have public accountability in Indonesia to present a comprehensive income statement that includes the presentation of net income, other comprehensive income and total comprehensive income. The results of the research on the characteristics of net income and total comprehensiveness benefit for various parties such as investors, financial analysts and creditors concerned with the quality of profit that is characterized from 4 perspectives mentioned before.. For the financial accounting standards setter, results of this study provide information about the quality of comprehensive earnings. 

Academic Research and Standard-Setting: The Case of Other Comprehensive Income

2012 ◽  
Vol 26 (4) ◽  
pp. 789-815 ◽  
Author(s):  
Lynn L. Rees ◽  
Philip B. Shane
Keyword(s):  
Academic Research ◽  
Accounting Standards ◽  
Standard Setting ◽  
Net Income ◽  
Financial Accounting Standards Board ◽  
Comprehensive Income ◽  
Other Comprehensive Income ◽  
Income Reporting ◽  
Definition Of ◽  
Accounting Standard Setting

SYNOPSIS: This paper links academic accounting research on comprehensive income reporting with the accounting standard-setting efforts of the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB). We begin by discussing the development of reporting other comprehensive income, and we identify a significant weakness in the FASB's Conceptual Framework, in the lack of a cohesive definition of any subcategory of comprehensive income, including earnings. We identify several attributes that could help allocate comprehensive income between net income, other comprehensive income, and other subcategories. We then review academic research related to remaining standard-setting issues, and identify gaps in academic research where hypotheses could be developed and tested. Our objectives are to (1) stimulate standard-setters to better conceptualize what is meant by other comprehensive income and to distinguish it from earnings, and (2) stimulate researchers to develop and test hypotheses that might help in that process.

scholarly journals PENGARUH RELEVANSI NILAI INFORMASI OTHER COMPREHENSIVE INCOME DAN NET INCOME TERHADAP RETURN SAHAM

2017 ◽  
Vol 17 (1) ◽  
pp. 53
Author(s):  
Titik Aryati ◽  
Natasya Nadia Wibowo
Keyword(s):  
Stock Return ◽  
Value Relevance ◽  
Stock Exchange ◽  
Panel Data Analysis ◽  
Secondary Data ◽  
Net Income ◽  
Manufacturing Companies ◽  
Comprehensive Income ◽  
Other Comprehensive Income ◽  
Size Growth

<p><em>This research has a purpose to analyze the influence value relevance of information Other Comprehensive Income and Net Income in explaining Stock Return by using control variables, namely Firm Size, Growth, Debt to Total Assets, and Return on Assets. </em></p><p><em>The sample used in this research are manufacturing companies which is listed in Indonesian Stock Exchange from 2011 to 2015. Obtained by 53 manufacturing companies the research sample. Data used in this research are secondary data obtained from the form of the annual audited financial statements derived from the Indonesia Stock Exchange (IDX) the period of 2011-2015 and the Indonesian Capital Market Directory (ICMD) in the period 2011-2015. The statistic method used to test on the research hypothesis is panel data analysis. The research results found that variables of the research model which are Other Comprehensive Income has a negative and significant effect on stock return, whereas Net Income has a positive and significant effect on stock return.</em></p>

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