A Research On Value Relevance Of Comprehensive Income And Its Components

This paper investigates the value relevance of comprehensive income and its components in the context of China's capital market. By building the price model, based on data of the financial statements (2007 to 2009) under the new accounting standards from Shang hai A-share listed companies, this paper investigates the value relevance of operating profit, net income, other comprehensive income, comprehensive income, particularly empirically studies the investors'response to disclosure (defined and adjusted in 2009) of comprehensive income and other comprehensive income firstly. Through research, we draw the following conclusions:First, both comprehensive income and its components with the stock price significantly positive correlation. Second, the value relevance of comprehensive income is weaker than the net income, namely, the investors still pay more attention to the traditional earnings, and comprehensive income concept needs to be improved. Third, the disclosure (defined and adjusted in 2009) of comprehensive income and other comprehensive income cannot enhance the value relevance of comprehensive income, and also affect on investors to accurately understand the other comprehensive income. Based on the analysis of the empirical results, with the current capital market development stage and status, This paper provide suggestions that how to further improve the disclosure of comprehensive income and other comprehensive income, on the current capital market environment, in order to enhance investors' understanding about other comprehensive, reinforce the usefulness of financial information based decision-making, better service to our country's capital market development.