Study On Other Comprehensive Income Information Of The Listed Companies In China

Since the Other Comprehensive Income (OCI) was introduced in the <AccountingStandard Interpretation for Business Enterprise No.3>, which was issued by FinanceMinistry in2009June and set standards for the disclosure of the OCI in <The noticeabout annual report in2009based on accounting standard by listed companies andnon-listed companies>, many domestic scholars from the normative perspectivestudied the concept and content of OCI. But the standards has been issued for twoyears, what about the result of its implementation, whether it delivered effectiveincremental information. Research in this area is rare. Based on those considerations,this paper takes A-share companies listed as researching sample and uses empiricalmethod to have a try in the field. This based on event study model, analysis theinformation content of OCI through significance test and earnings responsecoefficients regression.Besides that, this paper also use pricing model to add further validation of theinformation of traditional net income, comprehensive income and OCI. In the courseof the study, this paper first expounded the research framework and purposes,determined the research ideas. Secondly, it explained the theoretical basis of OCI andthe development course of OCI accounting in foreign countries, analyzed relatedresearch. The third, combined with theoretical analysis and literature review, this paperput forward the hypothesis of this article, introduced research methods and samplesource. Finally, this paper analyzed the samples from empirical view. The empiricalresults show that:(1) Both traditional net income and comprehensive income have theinformation content, but the information content of comprehensive income isn’tstranger than that of traditional net income.(2) OCI has relevant information with stock price, and investors can obtain excess returns from the disclosure of OCI.Although the disclosure of the OCI provides investors with a certain amount ofinformation content, but as a new concept put forward, the OCI is imperfect either inthe implementation or standard-setting process. Some strategy suggestions can bemade for the improvement of OCI:(1) Confirmation standards of the OCI itemsshould be more specific and clear.(2) Set a second level subsidiary account OCI incapital reserve so that the OCI can be separated from capital transaction.(3) Set secondlevel subsidiary accounts under OCI item in the income statement to detail the sourceof OCI.(4) Enhance the propaganda, training and guidance of OCI in statement offinancial position view.