Research On The Value Relevance Of Other Comprehensive Income

The concept of "other comprehensive income" was first proposed by FASB in 1997 in the newly issued financial accounting standard No.130-comprehensive income report.The international accounting standards board(IASB)wrote "other comprehensive income" into the international accounting standards in 2007,and explicitly required enterprises to present other comprehensive income in the financial report.In order to cope with the changes of accounting environment,conform to the changes of accounting standards and keep the convergence of accounting standards for enterprises and international financial reporting standards in China,the Accounting Standards Committee of the Ministry of Finance issued the document "accounting standards for enterprises Interpretation No.3" in June 2009,which required listed companies to add "other comprehensive income" items under the "earnings per share" item at the end of the income statement for the first time.In January 2014,the Ministry of finance of China revised the basic accounting standards for enterprises and specific accounting standards on a large scale.Among them,accounting standards for Business Enterprises No.30-presentation of financial statements clearly stipulates the presentation method of other comprehensive income,that is,other comprehensive income shall be classified into other comprehensive income items that can be reclassified into profit and loss in the future accounting period and other comprehensive income items that cannot be reclassified into profit and loss in the future accounting period.Based on the data of A-share listed companies in Shanghai and Shenzhen from 2009 to 2018,this paper analyzes the value relevance of other comprehensive income and the incremental value relevance relative to net profit by using the price model and the yield model.In addition,this paper also uses the prediction model to study the prediction value and incremental prediction value of other comprehensive income,respectively,to test the prediction value of future net profit and future cash flow of operating activities,and discusses the impact of 2014 other comprehensive income presentation model reform on the prediction value of other comprehensive income through grouping regression.In the further analysis,this paper discusses the impact of other comprehensive income on audit fees.It is found that other comprehensive income has significant value correlation with stock price and stock yield,and other comprehensive income provides incremental value correlation compared with traditional net profit.In the test of forecasting function,both net profit and other comprehensive income have forecasting ability.It is further found that after adding other comprehensive income for regression,the overall goodness of fit of the model increases,and other comprehensive income has incremental prediction value.By comparing the regression results of the two groups of data in 2009-2013 and 2014-2018,it is found that the reform of the presentation mode of other comprehensive income in 2014 has significantly enhanced the correlation between other comprehensive income and the future performance of enterprises.In the further analysis,this paper finds that with the change of the absolute value of other comprehensive income,audit fees show the same change with the direction of other comprehensive income,that is,the greater the absolute value of other comprehensive income,the higher the audit fees.The research value of this paper is to use more data and longer time span than other scholars to test the value relevance of other comprehensive income,which has strong persuasion.In addition,compared with other studies,this paper directly tests the incremental forecast value of other comprehensive income,and also tests the policy effect of 2014 comprehensive income presentation reform and the spillover effect of other comprehensive income on auditor behavior.