An Empirical Reseacrh On Other Comprehensive Income And Eanring Quality

In2009,<The Accounting Standards Enterprises for Business: No.3>waspromulgated by China’s Ministry of Finance, and required for the first time that “theOther Comprehensive Income(OCI)"and "Comprehensive Income Amount(CI)"mustbe presented in the profit statement and disclosed in detail at the same time.<TheAccounting Standards Enterprises for Business: No.3> introduced the theory of CIinto China’s system of accounting standards which tends to the internationalaccounting standards. However, whether this CI theory is appropriate for China’scapital market or not? Whether presentation of CI and OCI can improve thetransparency of accounting information, increase the accounting value of theinformation, and impact the quality of accounting information of listed companies?The experts in China accounting academic are needed to study and discuss deeply.For this issue, the presentation and disclosure of OCI and CI are valued to study.Whether the presentation of OCI can affect the earnings quality of listedcompanies should be valued to study based on experience data in2009-2010annualfinancial reports of the listed company. We evaluate earnings quality from reliabilityand relevance of earnings Information and analyze their changes before and after thepresentation of OCI. At first, a measure of the extent of earnings management whichis discretional accruals(DA) use to study on earnings reliability study, and DA beforethe presentation of OCI is greater than after the presentation of OCI by comparison,indicating that the presentation of OCI to reduce earnings management of listedcompanies, thereby increasing the reliability of the earnings information; At second,there are three Indexes which are net profit, operating profit and comprehensive income as benchmark, while compared the value of these three Indexes before andafter the presentation of OCI through the price model and revenue model to foundthat the value relevance of these earnings Indexes before the presentation of OCI islower than after, indicating that the presentation of OCI can reduce the valuerelevance of earning information; Finally, in order to analyze more clearly theinformation content of OCI, the comprehensive income have been broken down intonet profit and OCI, then compare the information content before and after thedecomposition of the comprehensive income by the price model and revenue modeland found that compare to the total of CI, the decomposition have higher than thetotal information content, which describes the presentation as opposed to the totalcomprehensive income, the decomposition are better able to improve its informationcontent. Based on the results of this study,we can found that the presentation ofother comprehensive income has a good market response, but because of thepresentation time is shorter, there are still many problems in the presentation of OCI tand do not reflect the strong value relevance themselves.The theory of CI is a relatively new concept in China, whether investors orpublic companies ‘s awareness of it are relatively limited, and so some help can begiven for their understanding of OCI and CI, but there are still many limitations.Based on these analyze, it is recommended that the concept and connotation of OCIshould be powerful propagandized and the supervision of the content and accuracyshould be stronger which can improve their information content, we hope with theother comprehensive income presentation and disclosure, more scholars can getfurther research on the effect of other comprehensive income market with more yearsof data.