Research on the Comprehensive Income Information in China
|School||Dongbei University of Finance|
|Keywords||Comprehensive Income Other Comprehensive Income Presentation Format Information Content|
The Other Comprehensive Income (OCI) was introduced and explained in the <Accounting Standard Interpretation for Business Enterprise No.3>, which was issued by Finance Ministry in2009June. In December,<The notice about annual report in2009based on accounting standard by listed companies and non-listed companies> set standards for the disclosure of OCI in the notes. The theory of CI in China’s system tends to the international accounting standards. However, whether this CI theory is appropriate for China’s capital market or not? Whether it delivered effective incremental information? What about the result of its implementation? On the basis of previous studies, the purpose of this paper is to research the CI information content for high-quality accounting standard.Whether the presentation of OCI and CI can affect share price and stock returns should be valued to study based on experience data in2007-2012from Shanghai listed companies. This paper use price model and returns model, analyzing the information content through significance test and response coefficients regression. This paper not only studies on the value relevance of CI itself but also discusses whether profit pattern is to provide incremental information content. In the course of the study, this paper first expounded the research framework and purpose, summarized the domestic and foreign literature review and analyzed causes. Secondly, it explained the theoretical basis the development course of CI and its presentation format. In this part, this essay concluded that CI is superior to the traditional income, thus having practical significance, and through depth analysis of factor affecting CI presentation format, it drew that CI income statement format is more advanced than statement of stockholders equity format. Finally, combined with theoretical analysis and literature review, this paper mainly put forward the hypothesis of this article and analyzed the samples from empirical view. The empirical results show that:(1) Comprehensive income has value relevance, and in the profit table shown separately net income and other comprehensive income can increase the information content of higher.(2)The presentation of CI in the income statement has more value relevance than in the statement of stockholders equity.From the results of empirical research, it seems that CI provides a certain amount of information with good market response, and the income statement presentation also makes some progress. Although some help can be given for their understanding of OCI and CI, the CI is imperfect either in the implementation or standard-setting process. Based on these analyze, it is recommended that ministry of finance should specify the confirmation standards of the OCI item. Under OCI item in the income statement it is better to detail the source of OCI. The supervision of the content and accuracy should be stronger and the concept and connotation of OCI should be powerful propagandized, trained and guided which can improve their information. Now the details of other comprehensive income are reflected in the notes. With the further reform and improvement of reading the report, it seems that constructing a complete set of standards system of CI including the recognition, measurement and presentation is needed. This paper merely researched value relevance of total CI and OCI, so we hope more scholars will research these problems in the future.