| Based on data of the annual financial statements from 2007 to 2008 and the interim financial statement in 2009 from Shanghai and Shenzhen A-share listed companies, this paper empirically investigates the value-relevance of comprehensive income under the new accounting standards through the price model. Unlike the prior research, this study introduces other comprehensive income items defined by Chinese accounting standards to the regression model. While reviewing the value-relevance of comprehensive income, this paper also examines the relation between other comprehensive income items and stock prices. The main conclusions are as follows:(1) Traditional net income and comprehensive income both have the value-relevance, but the value-relevance of comprehensive income is stronger than that of traditional income.(2) Other comprehensive income information strengthens explanation power, but the explanation power of disaggregated items of other comprehensive income is higher than that of total other comprehensive income.(3) The relationship between each component of other comprehensive income and stock prices makes a great difference. Loss or profit from changes of fair value, changes of fair value on available-for-sale financial assets and the effect of changes of other owners' equity of the invested entity under the equity method are all remarkably correlated with stock prices. However, other components cannot enhance the value-relevance of accounting information.(4) Among the control variables, scale and tradable share proportion are both significantly negatively associated with stock prices, which means that the market makes an adverse evaluation for these two factors. Whereas institution investor's proportion is significantly positively associated with stock prices, which shows that the companies having larger institution investor's proportion are also priced higher by the market. Asset-liability ratio and securities market are not related with stock prices. |
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