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.

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.

The Definitions of Net Income and Comprehensive Income and Their Implications for Measurement

2016 ◽  
Vol 30 (4) ◽  
pp. 511-516 ◽  
Author(s):  
Ikuo Nishikawa ◽  
Takao Kamiya ◽  
Yasunobu Kawanishi
Keyword(s):  
Financial Performance ◽  
Financial Statements ◽  
Business Activity ◽  
Net Income ◽  
Accounting Standard ◽  
Comprehensive Income ◽  
Measurement Basis ◽  
Other Comprehensive Income ◽  
Current Value

SYNOPSIS: Historically, accounting standard-setters have not been successful in defining net income. Nor have they been successful in justifying the use of other comprehensive income (OCI) and recycling. This paper proposes the definitions of net income and comprehensive income and an approach to measurement based on the proposed definitions. Net income and comprehensive income should be defined as two separate elements of financial statements, with OCI being the linkage factor that reconciles the two elements. Recycling of all OCI items is required for both elements to have the characteristic of all-inclusiveness. Net income should represent the irreversible outcomes of an entity's business activities, and it follows that the measurement basis of current value should be used from the perspective of reporting an entity's financial performance only when an asset (or a liability) is readily converted to cash (or settled) and the entity's business activity does not legally, contractually, or economically restrict the entity's opportunity to convert the asset to cash (or settle the liability).

scholarly journals The Effect of Net Income and Other Comprehensive Income on Future’s Comprehensive Income With Attribution of Comprehensive Income as Moderating Variable

2021 ◽  
Vol 12 (3) ◽  
pp. 205
Author(s):  
Marhaendra Kusuma ◽  
Diana Zuhroh ◽  
Prihat Assih ◽  
Grahita Chandrarin
Keyword(s):  
Empirical Evidence ◽  
Predictive Power ◽  
Stock Exchange ◽  
Financial Statements ◽  
Data Sources ◽  
Net Income ◽  
Independent Variables ◽  
Comprehensive Income ◽  
Other Comprehensive Income ◽  
Income Data

This study aims to examine the effect of net income and other comprehensive income on the total of future’s comprehensive income with attribution of earning as a moderating variable. It also tests whether comprehensive income is more persistent than Net Income and whether re-measurement of the defined program is the highest predictive power for future CIs. The dependent variable was Comprehensive Incomet+1, and the independent variables were Net Income and Other Comprehensive Income. Data sources were financial statements 2014-2018 of 367 companies listed in Indonesia Stock Exchange. The empirical evidence were 1).Net income and other comprehensive income can predict future comprehensive income, 2). The CI attribution can improve the ability of NI and OCI in predicting future CI. 3). Net income is more persistent than other comprehensive income, 4). The defined program is the highest predictive power for future CIs. 

scholarly journals Measurement of Return on Asset (ROA) based on Comprehensive Income and its Ability to Predict Investment Returns: an Empirical Evidence on Go Public Companies in Indonesia before and during the Covid-19 Pandemic

2021 ◽  
Vol 16 (1) ◽  
pp. 94
Author(s):  
Marhaendra Kusuma
Keyword(s):  
Financial Performance ◽  
Cash Flows ◽  
Net Income ◽  
Public Companies ◽  
Comprehensive Income ◽  
Industrial Sectors ◽  
Income Statement ◽  
Other Comprehensive Income ◽  
Investment Returns ◽  
Future Cash Flows

Purpose - The concept of recognizing all inclusive income, which is used by IFRS and Indonesian SAK, is the basis for presenting other comprehensive income in the income statement. This change in format became the idea of developing a financial performance measurement.Methodology - Testing the effect of attributable comprehensive income ROA and attributable ROA net income on future cash flows and net income, as a proxy for the ability to provide future returns, and applying them in measuring performance before and during the Covid-19 pandemic.Findings - ROA net income is better able to predict future investment returns. ROA comprehensive income has more relevance value, when only other items of comprehensive income that have the potential to be realized are included. In assessing performance, users are advised to keep using the ROA of the net income version, and when using the ROA of the comprehensive income version, it is advisable to include only OCI which will be reclassified. The financial performance of companies in many industrial sectors experienced a decline during the Covid 19 pandemic using two ROA measures.Novelty - Development of ROA formulation by including other comprehensive income and profit attribution, so far ROA is only based on net income.

Assessing value relevance of comprehensive income in European banks and other financial institutions

2013 ◽  
pp. 13-41 ◽  
Author(s):  
Alessandro Mechelli ◽  
Riccardo Cimini
Keyword(s):  
Financial Institutions ◽  
Value Relevance ◽  
Financial Statements ◽  
Financial Assets ◽  
Net Income ◽  
Consolidated Financial Statements ◽  
Comprehensive Income ◽  
European Banks ◽  
Gains And Losses

The IAS/IFRS compliant groups have been disclosing comprehensive income since 2009, when the IAS 1-revised became effective. This paper aims to investigate the value relevance of comprehensive income and its components in European banks and other financial institutions. The research has been developed by having a sample of 166 European listed groups whose data have been collected in the 2009, 2010 and 2011 (498 firm-year observations) consolidated financial statements. In contrast to previous findings, related to all the sectors, our research highlights a higher value relevance of comprehensive income in respect to net income. Moving to the single OCI components, our results suggest that gains and losses on remeasuring available-for-sale financial assets (AFSit) are value relevant in European banks and other financial institutions.

The Volatility of Other Comprehensive Income and Audit Fees

2015 ◽  
Vol 30 (2) ◽  
pp. 195-210 ◽  
Author(s):  
Hua-Wei Huang ◽  
Steve Lin ◽  
K. Raghunandan
Keyword(s):  
Explanatory Power ◽  
Accounting Standards ◽  
Audit Fees ◽  
International Accounting Standards ◽  
Net Income ◽  
Future Earnings ◽  
Inherent Risk ◽  
Comprehensive Income ◽  
Other Comprehensive Income ◽  
Equity Price

SYNOPSIS The volatility in other comprehensive income (OCI) reflects how market-related price movements, such as exchange rate and equity price changes, affect a firm's future profits. Hence, firms with higher volatility of OCI are likely to have higher inherent risk. Using hand-collected data from 2002–2006, we find that the volatility of OCI is positively associated with audit fees and provides significant incremental explanatory power for audit fees over and above the level of OCI and the volatility of net income. We also find that the effect of the volatility of each component of OCI on audit fees is consistent with the prediction of how it might affect a firm's future profits. Our results support recent efforts by the International Accounting Standards Board (IASB) to require firms to present separately OCI components that may affect future earnings from those that may not affect future earnings.

Comparing the Value Relevance, Predictive Value, and Persistence of Other Comprehensive Income and Special Items

2011 ◽  
Vol 86 (6) ◽  
pp. 2047-2073 ◽  
Author(s):  
Denise A. Jones ◽  
Kimberly J. Smith
Keyword(s):  
Predictive Value ◽  
Value Relevance ◽  
Cash Flows ◽  
Data Availability ◽  
Net Income ◽  
Special Items ◽  
Comprehensive Income ◽  
Other Comprehensive Income ◽  
Gains And Losses ◽  
Future Cash Flows

ABSTRACT Gains and losses reported as other comprehensive income (OCI) and as special items (SI) are often viewed as similar in nature: transitory items with little ability to predict future cash flows and minimal implications for company value. However, current accounting standards require SI gains and losses to be recognized in net income, while OCI gains and losses are deferred until realized. This study empirically compares OCI and SI gains and losses using a model that jointly estimates value relevance, predictive value, and persistence. Results show that both SI and OCI gains and losses are value-relevant, but SI gains and losses exhibit zero persistence (i.e., are transitory), while OCI gains and losses exhibit negative persistence (i.e., partially reverse over time). Further, we find that SI gains and losses have strong predictive value for forecasting both future net income and future cash flows, while OCI gains and losses have weaker predictive value. Data Availability: All data are publicly available from sources indicated in the text.

scholarly journals The Impact of Other Comprehensive Income Items on Financial Performance: Case of Jordanian Commercial Banks

2019 ◽  
pp. 1216-1228
Author(s):  
Adul Aziz Saymeh ◽  
Ayman Mansour Khalaf ALkhazaleh ◽  
Eman Marwan Musallam
Keyword(s):  
Financial Performance ◽  
Commercial Banks ◽  
Net Income ◽  
Return On Assets ◽  
Return On Equity ◽  
Comprehensive Income ◽  
Dependent Variables ◽  
Other Comprehensive Income ◽  
Independent Variable ◽  
The Impact

This study aims to determine the effect of the independent variable other comprehensive income on the dependent variables represented by the financial performance of commercial banks. Researcher has studied the case of Jordanian Commercial Banks during the period 2012 to 2017. The study sample consists of 13 Jordanian commercial banks. The study independent variable was given by the quotient of other comprehensive income on net income. The ratios: financial performance by return on assets, and return on equity were the two dependent variables. Study hypotheses were tested by the simple regression equation and T- test. It was found that there was a statistically significant effect of other comprehensive income on the financial performance as measured by the return on assets and return on equity. This significance can be attributed to the increasing weight of other comprehensive income items which makes the value of other comprehensive income an indicator of profitability and efficiency of banks and means of maximizing their wealth. It is recommended that Amman Stock Exchange, Securities Commission and the Companies Control Department, to urge the companies listed on ASE to increase the awareness of companies’ management about the importance of other comprehensive income concept.

scholarly journals Recognition of comprehensive income in Slovak companies

2014 ◽  
pp. 8-14 ◽  
Author(s):  
Marta Lapková ◽  
Jana Stašová
Keyword(s):  
Financial Institutions ◽  
Financial Statements ◽  
National Standards ◽  
Company Performance ◽  
Financial Assets ◽  
Comprehensive Income ◽  
Other Comprehensive Income ◽  
Gains And Losses ◽  
A Company

Financial statements are the key resource for assessing a company´s performance. The form and content of financial statements reflect a country`s accounting regulations. If financial statements can be drawn up under a range of different principles and procedures, this may cause problems for external users. The purpose of this paper is to evaluate comprehensive income recognition in the financial statements of Slovak companies that are prepared according to IFRS, with an emphasis on items of other comprehensive income. Our research showed that Slovak companies preparing financial statements in accordance with IFRS use a range of options allowed by national standards. Therefore the form of their comprehensive income recognition varies. Other comprehensive income was recognized in the statement of profit or loss and other comprehensive income, in the majority of researched entities. Our research shows that reporting of other comprehensive income divided into reclassified and not reclassified items is relevant for the assessment of company performance, because of their impact on reported profit or loss, and on selected indicators of profitability, particularly for our sample of financial institutions. This is due to the nature of their activity, for in  most cases the gains and losses on financial assets available for sale are recognized in other comprehensive income, which will be reclassified to profit or loss in subsequent periods.

scholarly journals Is Comprehensive Income Superior To Net Income In Equity Valuation? Evidence From The Capital Market Of Kuwait

2019 ◽  
Vol 35 (4) ◽  
pp. 97-108 ◽  
Author(s):  
Mostafa Elshamy ◽  
Husain Y. Alyousef ◽  
Jassem Al-Mudhaf
Keyword(s):  
Financial Reporting ◽  
Value Relevance ◽  
Stock Exchange ◽  
Explanatory Power ◽  
Equity Valuation ◽  
Net Income ◽  
Comprehensive Income ◽  
Valuation Model ◽  
Other Comprehensive Income ◽  
Gains And Losses

The study examines whether comprehensive income numbers reported under International Financial Reporting Standards (IFRS) have value relevance over net income in equity valuation. We use a sample of firms that are listed in Kuwait Stock Exchange from banking, investment, real estate, industrial, basic materials, telecommunications, consumer services, oil & gas and health care sectors during the years 2012-2015.The study applies a methodology used by Collins, Maydew and Weiss (1997) that is based on Ohlson (1995) equity valuation model and Theil (1971) technique to measure and compare the relative and the incremental explanatory power of comprehensive income and net income. The study provides evidence that comprehensive income is not superior to net income in equity valuation. Reporting other comprehensive income gains and losses as elements of the income statement produces a measure of earnings that decreases the explanatory power of the valuation model; decreases the incremental information content of earnings. Other comprehensive income gains and losses when added as an explanatory variable to the valuation model did not enhance significantly its explanatory power.The results we obtained supports the current requirement by the IFRS and US GAAP of deferring other comprehensive gains and losses and contributes to the literature on the value relevance of other comprehensive income gains and losses in emerging capital markets.

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