Research On The Value Relevance Of Comprehensive Income

Since the early 1980 s,FASB put forward the concept of comprehensive income for the first time,various countries have started a wave of comprehensive income reform.In order to comply with the development of socialist market economy in our country,enhance the openness of corporate accounting information,and maintain the timing of China's corporate financial accounting standards and international financial reporting standards,China's Ministry of Finance Accounting Standards Committee released in 2009,Enterprise Accounting for the first time,a listed company in the Explanatory Guide to Interpretations No.3 must add a "comprehensive income" item under "earnings per share" in the income statement.In addition,in early 2014,China's Ministry of Finance revised the basic criteria and specific criteria in the Accounting Standards for Business Enterprises on a large scale.Among them,the most obvious change was the supplementary amendment to "comprehensive income".Based on the modified Ohlson price model,profit model and the forecast model,the paper takes the revision of the Accounting Standards for Business Enterprises as an opportunity in 2014 to support the study to compare the value of comprehensive income and net profit from the three aspects of comprehensive income.The first level is the total comprehensive income.The second level is the simple division of the total comprehensive income: the net profit,the amount of other comprehensive income items that will be reclassified to profit or loss in subsequent accounting periods in subsequent accounting periods and the amount of other comprehensive income items that can not be re-accounted for in subsequent accounting periods.The third level is the specific division of the total comprehensive income: net profit,the equity method of accounting based on the investment unit after the accounting period can meet the provisions of The share of other comprehensive income that is reclassified to profit or loss,the profit or loss on the reclassification of held-to-maturity investments classified as available-for-sale financial assets,the profit or loss from changes in the fair value of available-for-sale financial assets,and other specific items.The final empirical conclusion of this paper shows that both comprehensive income and net profit have significant value relevance.The comprehensive income has higher ability to explain the stock price and stock returns than the net profit.However,the comprehensive income has a lower influence on the predictability of the future cash flow and future net profit than net profit.The above conclusions also explain to some extent that the revision of the accounting standards for business enterprises to improve the financial reporting information has a certain significance.