scholarly journals The predictive power of comprehensive income in Polish companies listed on the Warsaw Stock Exchange

2019 ◽  
Vol 2019 (105 (161)) ◽  
pp. 113-136
Author(s):  
Katarzyna Bareja ◽  
Magdalena Giedroyć ◽  
Małgorzata Wrzosek
Keyword(s):  
Predictive Value ◽  
Quantitative Research ◽  
Predictive Power ◽  
Value Relevance ◽  
Stock Exchange ◽  
Net Income ◽  
Comprehensive Income ◽  
Future Performance ◽  
Warsaw Stock Exchange ◽  
Other Comprehensive Income

Poland is historically classified within the Continental European model of accounting. The aim of the paper is to find the answer to the question of whether the Anglo-Saxon measure of financial results, which is comprehensive income, introduced into Polish reporting practice by the implementation of IFRS, has better predictive power than net income. The consequences of reporting comprehensive income are still a research gap in Poland. This article fills the gap regarding the predictive value of comprehensive income on the Polish market, and at the same time, it constitutes a contribution to global research in this area. The content presented in this article was developed using studies of the domestic and foreign literature. The methodology adopted in our study refers to the commonly used methodology of quantitative research on value relevance and the predictive value of comprehensive income. Our results indicate that net income and comprehensive income have the same predictive value for future performance. The research showed that neither other comprehensive income as a single indicator nor separate items of other comprehensive income has significant predictive power for future performance. The results of our research may help legislative bodies to make decisions on whether to extend the financial statement by requiring the statement of comprehensive income. In addition, our study presents, in a very broad way, the results of the latest research on NI and CI.

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 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>

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.

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.

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.

scholarly journals PREDICTIVE VALUE OF OTHER COMPREHENSIVE INCOME: EVIDENCE FROM ASEAN

2020 ◽  
Vol 17 (2) ◽  
Author(s):  
Puji Rahayu ◽  
◽  
Indra Kusuma ◽  
Keyword(s):  
Predictive Value ◽  
Value Relevance ◽  
Relevant Information ◽  
Fair Value ◽  
Financial Reports ◽  
Comprehensive Income ◽  
Future Performance ◽  
Other Comprehensive Income ◽  
Level 3 ◽  
One Year

This paper examines the predictive value of other comprehensive income and its disclosure in ASEAN. Unlike value relevance, the predictive value of other comprehensive income has not been extensively addressed in the literature. We conduct the first study examining the predictive value of other comprehensive income and its disclosure to prove that not only fair value as relevant information, but also other comprehensive income reflecting the changes of fair value. We use hand-collected data taken from the financial reports. This study employs a panel regression model to test the ability of other comprehensive income and its disclosure to predict firms’ future performance. The results confirm that as relevant information, other comprehensive income and its disclosure have predictive value. In addition, other comprehensive income which interacted with disclosure of other comprehensive income resulted predictive value only for one year ahead. Furthermore, other comprehensive income components which belongs to fair value level 1 and 2 have predictive value because it uses market-based input. Meanwhile, other comprehensive components which belong to fair value level 3 only have predictive value for one year ahead because it uses unobservable input that can ­­lead to higher subjectivity.

scholarly journals The role of comprehensive income in predicting banks’ future earnings based on the practice of banks listed on the Warsaw Stock Exchange

Equilibrium ◽  
2017 ◽  
Vol 12 (3) ◽  
Author(s):  
Artur Sajnóg
Keyword(s):  
Predictive Power ◽  
Stock Exchange ◽  
Rank Correlation ◽  
Value Added ◽  
Net Income ◽  
Main Research ◽  
Future Earnings ◽  
Comprehensive Income ◽  
Spearman’S Rank Correlation ◽  
Warsaw Stock Exchange

Research background: In the economic literature there are many arguments presented by critical supporters and opponents of measuring and reporting comprehensive income. There is a justified need to examine the relevance and usefulness of comprehensive income, especially the predictive power of comprehensive in-come for forecasting future earnings. It may be assumed that the comprehensive income has a better predictive power for future bank performance than net income, because this measure includes many elements, which were previously presented in the statement of changes in equity. Purpose of the article: The major subject of the theoretical-empirical study presented in this paper is the evaluation of the usefulness of comprehensive income for predicting banks’ future earnings. Realization of the fundamental objective of this paper was centered around the main research hypothesis, stating that in economic practice of banks listed on the Warsaw Stock Exchange it can be assumed that there is a positive predictive power of financial result in forecasting financial standing of these entities. Methods: The research comprised bank joint-stock companies listed on the Warsaw Stock Exchange (qualified on 15.09.2016). Empirical data for the study was obtained from the quarterly financial statements (the period from 2009 to 2015) from EMIS. The problem was realized in two analytical dimensions: absolute dimension financial results, and a relative dimension (return ratios). The research method was the regression analysis conducted by means of Spearman’s rank correlation coefficient and by two regression models in two versions. Findings & value added: The research showed that the analyzed bank companies were characterized by a diversity usefulness of comprehensive income for predicting banks’ future earnings. Nevertheless, it must be stressed that the calculated Spearman’s rank correlation coefficients confirm in most instances a positive character of dependence between the comprehensive income and future return ratios. The results of the estimation of econometric models shows the positive association of comprehensive income with future profitability of banks.

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 Sector Diversification of Statements of Comprehensive Income Illustrated with the Example of Entities Listed on the Warsaw Stock Exchange

2019 ◽  
Vol 19 (2) ◽  
pp. 134-148
Author(s):  
Piotr Prewysz-Kwinto
Keyword(s):  
Stock Exchange ◽  
Financial Statements ◽  
Descriptive Statistics ◽  
Accounting Standard ◽  
Comprehensive Income ◽  
Warsaw Stock Exchange ◽  
Other Comprehensive Income ◽  
High Level ◽  
International Accounting Standard ◽  
The Way

Abstract Research background: The rules of preparing the statement of comprehensive income are included in the International Accounting Standard 1 “Presentation of Financial Statements” which gives a lot of freedom in the way information is presented in these documents. So the following question was asked whether the way of presenting information regarding results between enterprises representing the same industries manifests similarities or differences? Purpose: The main aim of this paper is to verify whether despite the high level of flexibility given by IAS 1 in presenting information, the statements of comprehensive income prepared by entities belonging to the same sectors, manifest significant similarities. Research methodology: The research covered the financial statements prepared for the financial years 2015–2017 and by almost 200 entities listed on the Warsaw Stock Exchange and representing 14 different industries. The method of descriptive statistics was used in the quantitative analysis. Results: The results obtained allowed to show many similarities in statements drawn up by entities representing the same sectors concerning among others: the forms of drawing up this document, the variant of a statement, its internal construction and presentation of other comprehensive income. Novelty: Research on sector differentiation of information in the statement of comprehensive income on a group of entities listed on the Warsaw Stock Exchange has not been conducted yet.

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