Comprehensive Income: which potential effects on firms' performance evaluation and users' decision process?

2016 ◽  
pp. 55-94
Author(s):  
Pier Luigi Marchini ◽  
Carlotta D'Este
Keyword(s):  
Performance Evaluation ◽  
Decision Process ◽  
Financial Analysts ◽  
Listed Companies ◽  
Financial Statement ◽  
Comprehensive Income ◽  
Other Comprehensive Income ◽  
Gains And Losses ◽  
The Impact

The reporting of comprehensive income is becoming increasingly important. After the introduction of Other Comprehensive Income (OCI) reporting, as required by the 2007 IAS 1-revised, the IASB is currently seeking inputs from investors on the usefulness of unrealized gains and losses and on the role of comprehensive income. This circumstance is of particular relevance in code law countries, as local pre-IFRS accounting models influence financial statement preparers and users. This study aims at investigating the role played by unrealized gains and losses reporting on users' decision process, by examining the impact of OCI on the Italian listed companies RoE ratio and by surveying a sample of financial analysts, also content analysing their formal reports. The results show that the reporting of comprehensive income does not affect the financial statement users' decision process, although it statistically affects Italian listed entities' performance.

Is Other Comprehensive Income Reported in the Income Statement More Value Relevant? The Role of Financial Statement Presentation

2016 ◽  
Vol 33 (4) ◽  
pp. 624-646 ◽  
Author(s):  
Steve Lin ◽  
Donel Martinez ◽  
Changjiang Wang ◽  
Ya-wen Yang
Keyword(s):  
Value Relevance ◽  
Financial Statements ◽  
Financial Statement ◽  
Future Research ◽  
Accounting Standard ◽  
Comprehensive Income ◽  
Income Statement ◽  
Other Comprehensive Income ◽  
Recent Financial Crisis

This study examines (a) whether other comprehensive income ( OCI) is more value relevant when reported in a more prominent and transparent location in financial statements, (b) how economic condition affects value relevance of OCI reported in different locations, and (c) whether value relevance of OCI is affected by the implementation of Accounting Standard Update (ASU) 2011-05, which requires reporting OCI in either a combined statement of income and comprehensive income or a separate statement of comprehensive income ( SCI), and prohibits reporting OCI only in the statement of changes in shareholders’ equity ( SSE). Using manually collected data for the period 2000-2012, we find that investors consistently priced OCI reported in the SSE during the entire test period. We also find that investors priced OCI reported in the SCI only during recent financial crisis period (2007-2009) when the magnitude and volatility of OCI significantly increased. Further evidence shows that this finding is not driven by the investment bias of transient investors. Finally, we find that value relevance of OCI decreases for firms that changed the reporting location of OCI from SSE to SCI following the implementation of ASU 2011-05 compared with firms that did not change the reporting location. As investors are expected to be more capable of incorporating information reported in a more transparent location into price, this study explores some plausible explanations for the puzzling finding and calls for future research.

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.

Bridge over troubled water: Is it possible to define other comprehensive income?

2021 ◽  
pp. 61-87
Author(s):  
Thomas Ryttersgaard
Keyword(s):  
Conceptual Framework ◽  
Balance Sheet ◽  
Accounting Standards ◽  
The Core ◽  
Comprehensive Income ◽  
Accounting Principles ◽  
Income Statement ◽  
Other Comprehensive Income ◽  
Definition Of ◽  
Gains And Losses

Although other comprehensive income did not exist in the conceptual framework until 2018, it has been a part of IFRS for many years, and it has not been defined based on accounting theory. This paper considers arguments for the current use of other comprehensive income under IFRS and finds that matching and prudence are at the core of other comprehensive income in IFRS despite not being elements of the conceptual framework. This suggests that the concept of other comprehensive income exists because the IFRS standards are founded on a mix of balance sheet-based and income statement-based accounting principles. Based on the characteristics of other comprehensive income and the IASB's arguments for the recognition of gains and losses in other comprehensive income, this paper proposes a definition of other comprehensive income that can be used to ensure a uniform application of the concept across accounting standards and to reduce risks of inconsistency.

The Case Analysis of Presentation and Disclosure about other Comprehensive Income

2014 ◽  
Vol 687-691 ◽  
pp. 4691-4694
Author(s):  
Xing Wei
Keyword(s):  
Accounting Standards ◽  
Case Analysis ◽  
Financial Statement ◽  
International Accounting ◽  
International Accounting Standards ◽  
Accounting Standard ◽  
Comprehensive Income ◽  
Other Comprehensive Income ◽  
China National Petroleum Corporation ◽  
Year 2013

This article selects the financial statement established by the CNPC(China National Petroleum Corporation) for the year 2013 according to the Chinese accounting standard for business enterprises as an example, analysis of the problems of presentation and disclosure of other comprehensive income in our country, and contrast and analyze the stipulation about other comprehensive income presentation and disclosure stipulated by the IAS (International Accounting Standards) and FASB statements.

scholarly journals Corporate Reporting of Other Comprehensive Income

2018 ◽  
Vol 8 (2) ◽  
pp. 212
Author(s):  
Charles Mulford ◽  
Anna Babinets
Keyword(s):  
Financial Performance ◽  
Annual Report ◽  
Financial Statements ◽  
Net Income ◽  
Income Loss ◽  
Future Earnings ◽  
Corporate Reporting ◽  
Comprehensive Income ◽  
Other Comprehensive Income ◽  
Gains And Losses

In this study, we examine the annual report filings of S&P 100 companies that report other comprehensive income/(loss) over the three-year period of 2013-2015. We seek to gain a deeper understanding of the components of other comprehensive income and to determine if there is a systematic tendency for companies to include more gains or losses in other comprehensive income. Further, we seek to determine which components of other comprehensive income show more unexpected losses than gains and what impact other comprehensive income gains and losses may have on future earnings.We find a systematic tendency for firms to report more losses than gains in other comprehensive income, both in frequency and amount. This result is especially true for investment-related gains and losses, where managements have more discretion in the timing of gain and loss recognition.In terms of their impact on future earnings, we find that 43 companies in the S&P 100 reclassified some component of accumulated other comprehensive income gains and losses to net income over the period 2013- 2015, highlighting the observation that other comprehensive income gains and losses are, in effect, future elements of net income. These results remind analysts and investors that net income does not tell the entire story of a firm’s financial performance. Beyond users of financial statements, regulators, such as the FASB and SEC, may want to reconsider whether items of other comprehensive income should be included in net income.

scholarly journals Preliminary Evidence Of SFAS No. 130's Effect On Gains Trading In The Insurance Industry

2011 ◽  
Vol 19 (4) ◽  
Author(s):  
Charles E. Jordan ◽  
Stanley J. Clark ◽  
Mary H. Anderson
Keyword(s):  
Earnings Management ◽  
Insurance Industry ◽  
Preliminary Evidence ◽  
Financial Statement ◽  
Comprehensive Income ◽  
Before And After ◽  
Flow Through ◽  
Gains And Losses

Gains trading represents a form of earnings management whereby appreciated marketable securities are sold at a gain while those with a loss are retained. By not requiring unrealized gains and losses on available-for-sale securities to flow through income, SFAS No. 115 failed to close the door on this type of earnings management. With SFAS No. 130, however, these unrealized gains and losses must now be reported prominently in a financial statement as a component of comprehensive income. By examining the level of gains trading for a sample of companies in the insurance industry both before and after the implementation of SFAS No. 130, the current study provides evidence suggesting that this form of earnings management subsided subsequent to the adoption of SFAS No. 130.

Corporate social responsibility and institutional investors: the intervening effect of financial performance

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Shafat Maqbool ◽  
Nasir Zamir
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Financial Performance ◽  
Institutional Investors ◽  
Decision Process ◽  
Content Type ◽  
Corporate Social ◽  
The Impact ◽  
The Relationship

PurposeThe research on the role of corporate social responsibility in investors' decision process has proliferated over the past few decades. This paper aims to explore the mediating role of financial performance in the relationship between corporate social responsibility and institutional investors.Design/methodology/approachPanel regression was performed on a sample of 29 commercial banks nine years from 2009 to 2017.FindingsThe initial findings of the study show that that corporate social responsibility has a positive and significant impact on institutional investors. However, when the interaction term (financial performance) was incorporated, the relationship between CSR and institutional turns out to be neutral. The study concludes that financial performance plays a pivotal role in the selection of investment avenues.Originality/valueIn Indian context, there is a dearth of research work which studies the impact of sustainable practices on investors' decision process. This topic has received wider attention but lacks insights from developing countries, like India. This article presents a new approach to verify the relationship through the mediating variable (financial performance).

The Impact of Social Movements on Policy Outcomes in Partly Free Democracies: Evidence from the “Citizens for Macedonia” Struggles in a Captured Macedonian State

2020 ◽  
pp. 088832541989799
Author(s):  
Ivan Stefanovski
Keyword(s):  
Active Role ◽  
International Community ◽  
Policy Outcomes ◽  
Southeast Europe ◽  
Protection Of Human Rights ◽  
The Republic ◽  
Gains And Losses ◽  
International Statebuilding ◽  
The Impact

This article belongs to a forthcoming special cluster, “Contention Politics and International Statebuilding in Southeast Europe” guest-edited by Nemanja Džuverovic, Julia Rone and Tom Junes. This article looks at the impact of one of the recent waves of mobilization in the Republic of Macedonia, the “Citizens for Macedonia” platform, over policy outcomes that originally derived from the movement actor. Furthermore, the text highlights the crucial role of the international community in shaping and implementing the policy outcomes, playing the role of international statebuilders in the process of reintroducing of democracy in the captured Macedonian state. The theoretical framework and the literature review present an attempt to bridge contemporary works on social movement studies with those on democratization and international state building. A lot of emphasis is also put on the peculiar political opportunity structure, and the difficult and movement-unfriendly conditions in which the citizens’ platform operated. On the other hand, the article tries to show the gains and losses of a coalition between an established political party, and a loose horizontal network of citizens and citizens’ organizations that advocate for rule of law and protection of human rights. The central conclusions that can be extrapolated from this work are the strong and committed claims by the movement, articulated through various repertoires of action, but also the active role of the international community, which presented a conditio sine qua non, bringing down the regime led by former PM Nikola Gruevski and freeing the state institutions previously occupied by the political parties in power.

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