Comprehensive Income And Enterprise Value Correlation

With the change in an increasingly complex business environment changes, as well as financial accounting objectives, the drawbacks of traditional earnings outlook has become increasingly prominent, the concept of comprehensive income, highlighting the advantages. However, the thought problem is that the introduction of the theoretical concept of comprehensive income really put it as the explanatory power of the stock price is higher than the net profit of the traditional concept of income? In this regard, the Western countries were first examined earnings outlook, opening a new era of exploration of reform in the income statement. Scholars began to explore closer economics income but will comply with accounting features quantifiable, an earnings outlook identifiable, i.e. concept of comprehensive income. In theory, this view should be more reasonable and reflect the company’s business situation; however, empirical study found that research findings may be related to the theoretical opposite. Although Western countries have recognized the concept of comprehensive income and comprehensive income reporting requirements, but research is still continuing, the theory still evolving; domestic scholars flocked to the theory of comprehensive income, is also not yet reached the same conclusion.In this paper,2010-2013Shanghai and Shenzhen A-share listed company’s accounting earnings data as well as price data for the study sample, with Olhson model-price model, to build relationships between accounting earnings and stock price data, and by comparison with the traditional benefits of comprehensive income the distinction between qualitative research concept of comprehensive income gains compared to the advantages of the traditional concept of place, focusing on the value of comprehensive income and enterprise value through empirical correlation issues, mainly the following conclusions:First, the traditional benefits associated with a value, but also in the test, the goodness of fit is the highest, the interpretation of the intensity of the strongest stock. Second, comprehensive income correlated with enterprise value, but when compared to the traditional income, we believe that the goodness of fit test model of comprehensive income to be lower than the traditional income, comprehensive income explained that the intensity of the shares to be weaker than the net profit indicators. Third, based on the traditional revenue model testing, the introduction of other comprehensive income variables, found no increase in other comprehensive income related to the value of the traditional benefits, but also related to other comprehensive income test itself and the stock price would not pass, that in other comprehensive weakly correlated with stock price gains. Fourth, the introduction of dummy variables, positive and negative other comprehensive income will be studied separately, the results show that attention to other comprehensive income in the process, people are more concerned about the loss of part of the owners’equity rather than profits.In an empirical study of the articles on the basis of this paper, the study and research purposes, in order to solve some practical problems and some suggestions of policy recommendations:(1)Strengthen the theory of comprehensive income election pass, improve users’ information comprehensive income concept understanding, strengthen the theory of comprehensive income.(2)Further improve the content of the income statement, comprehensive income will constitute a specific amount of the total amount of its projects are included in the income statement, in order to meet the information needs of users.(3) Improve the overall standards and norms related to income, comprehensive income theory makes more perfect, more widely.