The Value Relevance of Other Comprehensive Income: Non-financial and Financial Firms

• Main Authors: Chang, Chia-Ming, 張家銘
• Other Authors: Tsai, Chiu-Tien
• Format: Others
• Language: zh-TW
• Published: 2018
• Online Access: http://ndltd.ncl.edu.tw/handle/759svj

碩士 === 國立高雄第一科技大學 === 會計資訊系碩士班 === 106 === The objective of this paper is to examine whether the provision of other comprehensive income in firms’ financial statements under IFRS have value relevance. According to Taiwan Regulations Governing the Preparation of Financial Reports by Securities Issuers, a securities issuer shall provide all items of income and expense recognized in a period in a single statement of comprehensive income displaying components of profit or loss and components of other comprehensive income. This paper investigates empirically whether comprehensive income and its components of Taiwan companies provide the securities market with incremental value-relevant information over the net income. In addition, due to other comprehensive income are transitory items, the ability to predict future net income may different from the net income, this paper further examines the forecasting ability of other comprehensive income to net income. This study uses actual data on other comprehensive income for a sample of Taiwan firms listed in Taiwan in the period 2013-2016. The findings of this study suggest that aggregate other comprehensive income of non-financial firms didn’t have association with stock price and returns, but it positively associated with stock price and return in financial firms. However, the findings of this study suggest that net income is a better predictor of future net income relative to comprehensive income whether it is financial firms or not.