Research On The Relevance Of Comprehensive Income Value

With the factors complicating the diversification of business activities and external business environment, inflation and financial instruments such innovation at historical cost, prudence and realization- traditional accounting principles earnings ratio of limitations have become increasingly prominent, on the one hand historical cost basis does not fully reflect the company’s current condition of the assets; on the other hand, generate innovative financial instruments making more and more profits and losses, the "dirty surplus" is not included in the profit or loss, which can not be timely and accurate reflect the performance of enterprises. Many scholars study found that traditional accounting value relevance of earnings are falling, can not meet the needs of investors. Thus, scholars from various countries and accounting bodies have begun to explore new revenue models, and gradually formed the concept of comprehensive income. Comprehensive income is the reconstruction and development of traditional accounting earnings, net profit than providing a more comprehensive financial information. Subsequently, Europe and other countries have amended the relevant accounting standards, the introduction of comprehensive income presentation mode. To improve the quality of accounting information, while achieving convergence with international accounting standards, released in 2009, "Accounting Standard No. 3", first introduced the concept of comprehensive income. Then, followed by another document published on the 16 th accounting disclosures presented in other comprehensive income. 2014, China’s Ministry of Finance once again revised and promulgated the "new 30 presentation guidelines", formally incorporated the concept of comprehensive income accounting standards, and other comprehensive income content and disclosure were clearly defined. China has taken a series of initiatives aimed at improving the quality of accounting information, provide more useful information to the decision makers. However, in our current economic environment, the availability of comprehensive income for the decision-making behavior of information users more useful information, "after the new 30 presentation guidelines’ release, the value of comprehensive income information whether the correlation has increased, answering these questions requires more theoretical research and practical testing.This paper reviews and evaluates comprehensive income related to its valuerelevance research literature scholars, on the basis of a comprehensive definition of income and value relevance of the concept to explain the theoretical basis of research carried out, combined with China’s actual situation of comprehensive income value relevance of theoretical analysis and put forward hypotheses. Subsequently, the paper selected China’s Shanghai and Shenzhen A-share listed companies Board 2010-Annual Report 2014, data for the study sample, the price model, revenue model to test the robustness of the integrated use of comparative model goodness of fit, and VuongZ-test methods such as the value of the comprehensive benefits of different forms of presentation of a comparative analysis of the correlation, while using the double difference model(DID) "new 30, presentation guidelines," the effect of policy implementation have been tested. Through empirical main conclusions are as follows:(1) the value relevance of comprehensive income, net profit and total comprehensive income tradition has value relevance, price model, Total comprehensive income for stock prices to predict the intensity of inferior net profit, in the earnings model but just the opposite, and therefore, in our present stage, we can not obtain comprehensive income higher than the net value of the relevant conclusions, which need to be further verified.(2)Taken together, the findings support the majority net income + other comprehensive income than net worth in the form of high correlation.(3)In the incremental value relevance, the study results confirm other comprehensive income with incremental information content of information users, namely other comprehensive income with incremental value relevance.(4) In the test, "the new 30 presentation guidelines" effect of policy implementation, the price model confirmed the new guidelines can improve the value relevance of comprehensive income, revenue model confirmed the new guidelines can improve the incremental value of other comprehensive income correlation between two models complement each other, it illustrates the positive significance of policy implementation, "the new 30 presentation guidelines."Finally, according to the problem found in the study, and further to improve the comprehensive income and disclosure put forward some policy recommendations, and the revision of relevant accounting standards proposed some personal views, so that the concept of comprehensive income in our country can be better promotion and application, so that China’s capital market can be more sustainable, stable and healthy development.