| On February 15 th, 2006, the Ministry of Finance issued a basic standard and thirty-eight specific standards, revising the former standards drastically, which has indicated that Chinese criterion system is substantially in convergence with the international accounting standards. The new criterion system reflects the idea of comprehensive income, but other comprehensive income is not reported on the income statement. The Ministry of Finance introduced the concept of other comprehensive income to our country for the first time in its ‘Enterprise Accounting Standards Interpretation No.3’(hereinafter referred to as ‘explains the 3rd’) released on June 11 th,2009, requiring companies to add the subjects, ‘other comprehensive income’ and ‘comprehensive income’, to the income statement. On December 24 th, 2009, ‘Notice for Public Companies and Non-listed Companies to Finish Annual Financial Reports of 2009 According to the Accounting Standards’(hereinafter referred as the 16 th Document), issued by the Ministry of Finance, required to make specific provisions to the disclosure of ‘other comprehensive income’ in the notes of income statement, and to adjust the format of stockowners’ equitystatement. Since 2009, the annualfinancial report of enterprises implementing new accounting standardshasdisclosed ‘other comprehensive income’ and ‘comprehensive income’ in its income statement in accordance with the regulations in ‘explains the 3rd’ and ‘the 16 th document’. In June 2012, the Ministry of Finance also issued ‘Accounting Standards for Enterprises No.30-Presentation of Financial Statements’(draft). The article 32 and 33 in Chapter 4 mentioned other comprehensive income and comprehensive income and asked other comprehensive income to be presented into two kinds, depending on whether other comprehensive income can be reclassified into gains and losses in the following period.The article 33 in the revised ‘Accounting Standards for Enterprises No.30-Presentation of Financial Statements(hereinafter referred to as the revised version) issued by the Ministry of Finance in January 28 th, 2014 specifies that items of other comprehensive income should be classified and then presented according to other relevant accounting standards. Problems of classified presentation of other comprehensive income are also explained in the revised version.During the past six years, since 2009, the Ministry of Finance has issued documents for several times to revise other comprehensive income, fully proved its importance.For the abovementioned information, this dissertation will launch a research on the relevance and reliability of the accounting information of other comprehensive income with china’s capital market as backdrop after sorting out a mass of previous study finished by other people.This dissertation firstly provides the background, significance, direction and methodology of the research as well as the content organization and innovation of this dissertation. The next part uses the concepts of economic income and accounting income as the entry point and foundation to illustrate the connotation of other comprehensive income and comprehensive income. This part indicates the research direction and theoretical basis of this dissertation by explicating the relations between the other comprehensive incomes and accounting information, accounting information and enterprise value. Then it expounds relevant problems specifically about the characteristics, projects included, presentations of other comprehensive income and its effect on the articulation among financial statements. It also makes comparison between listing the other comprehensive income separately and into different categories, in order to help the information users and enterprise financial clerks understand other comprehensive income more thoroughly, and to standardize the information disclosurebehavior of listed companies. This section constitutes the theoretical analysis of this dissertation. The last past is about the empirical analysis. In chapter 4,the annual financial statements of listed companies of A-shares in Shanghai and Shenzhen markets from 2010 to 2013 will be used as samples to determine the effect on the decisions of investors and creditors if other comprehensive income is listed separately on the income statement. The annual financial reports of listed companies of A-shares in Shanghai and Shenzhen markets in 2014 will also be used as sample to determine the effect of other comprehensive income on the decisions of investors. This chapter makes contrastive analysis by using the empirical results of both samples to examine whether listing separately will increase the value relevance of other comprehensive income. In chapter 5,it examines the individual presentation status of other comprehensive income in the financial statements, using the listed companies of A-shares in Shanghai and Shenzhen markets from 2009 to 2013 as samples. Then it uses the samples of listed companies in Shanghai and Shenzhen markets in 2014 to examine the status of classified presentation of other comprehensive income, to make corresponding contrastive analysis, and to study the facticity of the accounting information disclosure on other comprehensive income. Chapter 6 also uses the same samples from 2010 to 2013. The distribution of earnings is uses to do the mathematical induction in order to test the difference between two types of companies from the aspect of the level and frequency of earnings management, thus we can figure out whether presenting other comprehensive income will affect a company’s earnings management or not.This dissertation draws the following main conclusions of the study, based on summing-up studies finished by predecessors: Firstly, from the perspective of the development progress of income, the theory of comprehensive income originates from the economics profit, takes shape during the concept of gains. It is the result of coordination between accounting gains and economics gains during the enriching and developing process of the former.Theoretically, compared with net income which is just traditional accounting gains, the concept of other comprehensive income is more appropriate in terms of the essence of business transactions and can better adapt to the economic reality that the value of assets increased rapidly after the collapse of Bretton Woods System, with a theoretical rationality and advances. Secondly, according to the result of empirical analysis, the disclosure of the information of other comprehensive income can affect the decision of investors and creditors. The presentation of this item can provide more information for its users than before, and users of financial reports(including investors and creditors) have paid more attention to other comprehensive income and comprehensive income. Therefore, listed companies should attach great importance to such items and standards-setting institutions should give more publicity to it, so as to popularize and heighten the level of understanding towards comprehensive income and other comprehensive income of financial reports’ users. The concept of comprehensive income and other comprehensive income have already been widely accepted by users of financial reports, thus, further disclosure of information of other comprehensive income and comprehensive income on the basis of net income can better serve the needs of users of financial reports and meet the standard of useful decision making. Thirdly,according to the research of the annual financial reports of listed companies from 2009 to 2013, it is discovered that the disclosure of other comprehensive income listed separately on the income statement and notes is unsound. However, since the issuance of the revised vision, it’s discovered that the reliability of the disclosure of other comprehensive income’s classified presentation has increased substantially from an overall perspective. Aspects, for instance, the ratio of the companies with misstatements, the misstatement of amount and types of misstatements, have been improved greatly. However there are still some misstatements existing. For instance, the item didn’t follow the rule of format, mentioned in the revised version, to be listed in different categories; the logical relationship of other comprehensive income among different financial statements is wrong; the concepts of other comprehensive income, comprehensive income and the detailed items of other comprehensive income are misunderstood. Fourthly, presenting information hidden in statement of changes in equity before 2009 in the income statement can make it easier for investors to get access to the information of earnings management about relevant items and reduce the cost for investors to understand earnings management.Standards-setting institutions’ compulsory requiring other comprehensive income and comprehensive income to be presented in the income statement, not only reflects the convergence to international standards, but also increase the reliance of information of other comprehensive items itself, ensuring the rationality and science of investors’ decisions.Consequently, the presenting of other comprehensive income in the income statement checks earnings management behavior of listed companies to some extent and make it possible for the performance evaluation system based on net income-led view of the income and expense to transit to evaluation system based on other comprehensive income-led asset-liability view.The innovation of this dissertation lies in following aspects: firstly, this paper makes empirical analysis about the relevance of the classified presentation of other comprehensive income and makes comparative analysis about the empirical results of the separate presentation of other comprehensive income. It uses the same model. It first did the empirical examination on the data of listed companies’ financial statements from 2010 to 2013, in order to examine the relevance of the separate presentation of other comprehensive income. It then did the same examination on the listed companies’ financial statement in 2014 to examine the relevance of classified presentation of other comprehensive income. Finally it compared both of the empirical results, examining whether classified presentation can increase the relevance of othercomprehensive income. Secondly, this paper expands the study area of other comprehensive income to its impact on the decision of creditors, based on the examination of the impact of information disclosure of other comprehensive income on the decisions of investors. This paper also takes the dada from the financial statements from 2010 to 2013, modelling to investigate whether the presentation of other comprehensive income will affect the decisions of creditors. Thirdly, taking the listed companies of A-shares in Shanghai and Shenzhen markets in 2014 as samples, this paper investigates the presenting conditions of other comprehensive income and comprehensive income on the financial statements, understanding thoroughly the effect of the policy after the issuance of ‘the revised version’. It also uses the financial statements of listed companies in Shanghai and Shenzhen markets from 2009 to 2013 as comparative samples to make analysis on whether the condition of information disclosure of other comprehensive income has improved after the issuance of the revised version. Fourthly, this paper examines the information disclosure of other comprehensive income and gives empirical test on the margins and frequency of earnings management in domestic listed companies. The sample of the listed companies of A-shares in Shanghai and Shenzhen stock markets from 2010 to 2013 is divided into two types: one is the companies presenting other comprehensive income on their annual financialreports; the other is the companies who didn’t present this item on their reports. This paper investigates whether there is significant difference on the margins and frequency of earnings management between these two types, in order to examine the effect of the information disclosure of other comprehensive income on the earnings management.
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