The Research On The Value Relevance Of Other Comprehensive Income

The income statement was implemented a major reform in the year 2009, that is the introduction of comprehensive income and other comprehensive income,This reform is the milestone to the international development and internationalization convergence.Whether the implementation of the guidelines has improved the quality of accounting information and is equal to the standard-setter’s goal, and whether it offers investorsincremental value information and new investment opportunities.All these requirea in-depth discussion and further study.This paper takes the publish of the new accounting standards as an opportunity, firstly dosystematical standard research on the other comprehensive income theory and the theoretical basis of the value relevance ofaccounting information, then proposes hypothesis on the basis of previous research, and selectthe sample data of Shanghai A stockmarket listing corporation during 2009—2013 years.Subsequently,based on the price model and combined them with our market conditions to better it, using theregression analysis method such as the correlation coefficient test of significance and goodness-of-fit, this paper does empirical research on the information content of other comprehensive income.The conclusionsof this study are:First, net profit and comprehensive income have value relevance.Compared with net profit, the value relevance of comprehensive income islower. Second, using net income andother comprehensive income to replace comprehensiveincomehave more value relevance than just presentationtotalcomprehensive income. Third,other comprehensive income does offer more valuerelevance to net profit. Last,other comprehensive income has continuous value relevance.The empirical results show that the introduction of the concept of comprehensive income in China has made asignificant market response, and the presentation mode of income statement also has some developmental.Although this paper provides the theoretical basis and empirical basis for comprehensive income and other comprehensive income related theories in some degree, there are still some short comingsin specific embodiments and applications of other comprehensive income. So this paper presents improved advices on how to further improve the disclosure and presentation of other comprehensive income, in order to enhance the information content of other comprehensive income.Our policy makers should be clearly recognized standards of specific projects of other comprehensive income, and reports them in the income statement after income tax deduction;Investors and managers needto establish the concept of comprehensive income;Regulatory authorities should improve the performance appraisal system.In addition, I hope that results of this study may contribute to standard-setting bodies,soas to consolidate the basis of the decision usefulness of earnings information and promote the development of China’s accounting standards to a high level.