Value Relevance of Comprehensive Income

Abstract

In this paper, we investigate the value relevance of comprehensive income and its components for a sample of 92 New Zealand companies over the period 2003-2010. We find a stronger association of aggregate comprehensive income with stock price and market returns relative to net income. The change in the asset revaluation reserve and the change in fair value of available-for-sale securities drive this association. However, foreign currency translation and cash flow hedges are also associated with prices and returns.

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

“…; 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.…”

“…The above regulatory decisions are predominantly informed by findings of the value relevance of CI (e.g., Cheng et al 1993;Dhaliwal et al 1999;Biddle and Choi 2006;Khan et al 2017), 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.…”

Laba Komprehenif vs Laba Bersih: Manakah yang Lebih Relevan?

“…Penelitian ini berusaha untuk membuktikan bahwa relevansi nilai relatif laba komprehensif lebih besar dari relevansi nilai relatif laba bersih selama tahap lanjut penerapan IFRS ke dalam PSAK tahun 2011-2016. Laba rugi komprehensif memiliki pos-pos pelaporan yang tidak hanya memperlihatkan kinerja perusahaan secara operasional seperti halnya laba bersih, namun juga terdapat pos-pos lain diluar kendali manajemen yang memiliki relevansi nilai (Khan, Bradbury, & Courtenay, 2017). Beberapa penelitian telah menunjukkan adanya hubungan yang lebih kuat antara pengungkapan komponen pendapatan komprehensif lain dan total laba komprehensif dengan harga atau return saham dibandingkan dengan laba bersih (Devalle, 2012), serta Kanagaretnam, Mathieu dan Shehata (2009).…”

Value Relevance of Comprehensive Income for the Canadian Market*

“…The value relevance of CI compared to NI is still an unresolved issue despite being the topic of several studies since the introduction of the “all‐inclusive” approach to evaluating financial performance. Research results have been mixed; for instance, Mechelli and Cimini (2014) propose and find that NI is more value relevant than CI, an outcome they attribute to the transitory nature of OCI components, whereas Khan, Bradbury, and Courtenay (2018) and Kanagaretnam, Mathieu, and Shehata (2009) obtain contrasting results. Other authors—for example, Biddle and Choi (2006), Deol (2013), and Lin, Martinez, Wang, and Yang (2018)—uncover significant relationships between OCI components and stock prices or returns.…”

“…We aim to increase knowledge about specific markets by looking at the value relevance of OCI components and CI reporting for the Canadian market. Similar to several authors (e.g., Dhaliwal, Subramanyam, and Trezevant, 1999; Khan et al, 2018), we use two approaches to examine CI value relevance: (i) analysis of the difference in NI and CI explanatory power ( R 2 ) for prices and returns and (ii) analysis of the association between OCI components and prices and returns.…”