Value Relevance of Comprehensive Income

Khan, Shahwali; Bradbury, Michael E.; Courtenay, Stephen M.

doi:10.2139/ssrn.2375508

Cited by 5 publications

(7 citation statements)

References 43 publications

(26 reference statements)

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“…; Badenhorst and Ferreira ; Reverte ; Khan et al. ), we use a share price specification model in order to mitigate the potential for incorrect inferences based on size differences (the ‘scale effect’). Barth and Clinch () find the undeflated specification model to be less effective than scaling with number of shares.…”

Section: Sample and Research Methodologymentioning

confidence: 99%

The Value Relevance of Operating Lease Liabilities: Economic Effects of IFRS 16

Inchausti

Pardo

2018

Australian Accounting Review

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The new IASB and FASB models for leases aim to improve the quality of financial reporting. To this end, both standard setters impose the recognition of assets and liabilities for operating leases. Meanwhile, preparers have been strongly lobbying against these changes, as in their view the new treatment will lead to negative economic consequences. We undertake a value-relevance study to examine whether as-if capitalised operating leases are priced by market users in a relatively unexplored setting. We consider Spanish listed firms, and employ handcollected data on operating leases disclosed in the notes to the financial statements to constructively capitalise the assets and liabilities. Our analysis suggests that investors in code-law countries with less developed markets and low enforcement quality do not behave any differently to those in common-law countries that have more developed markets and stricter enforcement policies. Investors equally value recognised debts and operating lease liabilities resulting from information in the notes in retail sectors. In our view, these results could provide some comfort to managers in the most affected industries, as they suggest the change will not have a major impact on the stock exchange.

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Section: Sample and Research Methodologymentioning

confidence: 99%

The Value Relevance of Operating Lease Liabilities: Economic Effects of IFRS 16

Inchausti

Pardo

2018

Australian Accounting Review

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“…The estimated values of the parameters of the adopted economic models indicated a higher predictive ability of comprehensive income than the net income, however, correlation analysis does not allow to consider the hypothesis as justified Khan et al (2018)…”

Section: -2012 224 Entitiesmentioning

confidence: 82%

“…Khan, Bradbury and, Courtnenay (2018) using financial information of 92 companies listed on the New Zealand Stock Exchange (NZSX) showed that there is a stronger association between comprehensive income and return rates than between them and net income, which, according to the concept of value-relevance research, indicates that this measure is more useful for investors than the net income. The study also provides evidence that two components of other comprehensive income -gains and losses on remeasuring available-for-sale financial assets and changes in revaluation surplus -are value-relevant (Khan et al, 2018).…”

Section: Literature Review On Comprehensive Income and Its Componentsmentioning

confidence: 86%

“…Some studies indicated comprehensive income as a more useful measure than the net income (e.g. Cahan et al, 2000;Kanagaretnam et al, 2009;Takahashi and Wong 2012;Khan et al, (2018); the others reached the opposite conclusions (Cheng et al, 1993;Dhaliwal et al, 1999;Kubota et al, 2007). Therefore, putting an explicit thesis on the subject is not possible and the research on the usefulness of comprehensive income has to be continued.…”

Section: Literature Review On Comprehensive Income and Its Componentsmentioning

confidence: 99%

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Usefulness of comprehensive income statement – preliminary study on the example of companies from the WIG30 index

Czajor¹,

Druszcz²,

Hendryk³

2020

Financial Sciences

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The financial result of a company is undoubtedly the most frequently analyzed category in making economic decisions. The changing needs of financial statements users resulted in the replacement of the classic financial result with the broader concept of comprehensive income, which was regulated in the International Accounting Standard 1 Presentation of financial statements. As a result a statement of the entity's comprehensive income is created. An important element analyzed by the scientific community is the presentation of the mentioned comprehensive income and its usefulness. The purpose of the article is to determine the impact of introducing the obligation to prepare a statement of comprehensive income on the usefulness of the financial statement. The usefulness has been assessed from the perspective of the form of statement of comprehensive income and the relevance of other comprehensive income's items as compared with net income.

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“…; Biddle and Choi ; Khan et al. ), despite conflicting yet compelling evidence about the lack of value relevance of CI relative to net income. This lack of value relevance has been attributed to the nature of certain CI elements.…”

Section: Theoretical Underpinning Literature Survey and Hypothesis Dmentioning

confidence: 99%

Does the Reporting Location of Other Comprehensive Income Matter? The Investor's Perspective

Wang

Jiang

2018

Australian Accounting Review

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In the context of changes mandated by the Chinese Ministry of Finance in January 2009 regarding the location in which other comprehensive income (OCI) is reported, this paper finds that reporting OCI on the performance statement significantly improves its value relevance. The improvement is driven by two OCI items: unrealised holding gains/losses on available‐for‐sale securities and the share of other comprehensive income of investees under the equity method. Our results show that the OCI reporting location matters, which supports the psychological perspective that investors pay more attention to salient information. Our findings lend strong support to the approach of standard setters in reporting OCI on the performance statement.

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Value Relevance of Comprehensive Income

Cited by 5 publications

References 43 publications

The Value Relevance of Operating Lease Liabilities: Economic Effects of IFRS 16

The Value Relevance of Operating Lease Liabilities: Economic Effects of IFRS 16

Usefulness of comprehensive income statement – preliminary study on the example of companies from the WIG30 index

Does the Reporting Location of Other Comprehensive Income Matter? The Investor's Perspective

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