The Research On Economic Effect Of Other Comprehensive Income Reporting And Disclosure Of Listed Companies In China

To ensure that Chinese Accounting Standard and International FinancialReporting Standards convergence persistence, The China’s Ministry of Finance issued<No.3Interpretation of Enterprise Accounting Standard> in2009and <No.30ofEnterprise Accounting Standard-Financial Statement Report (Exposure Draft)>(Exposure Draft for short) in2012, which aims to perfect and standardize the relatedother comprehensive income(OCI) with comprehensive income(CI) in financialreports. It plays a major role in the rapid development of the socialist marketeconomy and perfection of the accounting standards system in our country, which tosome extent improve the quality of the disclosure and transparency information ofenterprise financial report in our country. The users of financial report are able tounderstand more comprehensive the operation and achievements of enterprises, thenplay a role of checks and balances to the management in manipulating profits.Meanwhile the scientific and reasonable decision will come from the users offinancial report with the support of data.Under the current economy in our country, whether the specific compositionproject of other comprehensive income can help improve the information quality offinancial report, whether the information that provided by each composition project ofother comprehensive income was taken into full account of the stakeholders’information requirement still need to be validated. Facing the back ground, this paperreviews the related research literature of other comprehensive income from domesticand abroad, and reviewed Exposure Draft amendments to express their personalviews on the issues raised. Then analyzed the connotation of other comprehensiveincome and economic consequences of the theory. Finally, the Positive Test on each component of other comprehensive income presentation and disclosure of theeconomic consequences. This paper selects the financial data from2009-2011of theShanghai and Shenzhen stock listed companies in our country for the study sample. Itdoes research on the economic results of the presentation and disclosure of composeof other comprehensive income(OCI) using price model and rewards model from thepoint of view of value pertinence. The results shows that changes of the fair valueshare Available-for-sale financial assets, changes of share other owners’ equity ofinvestee under Equity Method and share foreign translation reserve, these three itemshave significant value relevance. And the resolution on share price and stock yieldfrom changes of the fair value Available-for-sale financial assets and foreigntranslation reserve is higher than that from changes of other owners’ equity ofinvestee under Equity Method.Although the concept of "other comprehensive income(OCI)" has beenintroduced to Accounting Standards for Enterprises in China for many years, in orderto make users of financial statements understand the knowledge in a better way, toimprove the quality of other comprehensive income information and the content ofvaluable information in financial statement which will impel the stakeholder to makescientific and reasonable economic decisions, it still requires relevant governmentdepartments to strengthen the promotion on the concept of other comprehensiveincome and supervision on presentation and disclosure.