The Research On The Value Relevance Of Comprehensive Income

In the background of international advolution trend of accounting standards, in2006,our country promulgated new accounting standards, the fair value measurement attribute isintroduced, the core position of asset-liability view is confirmed, the statement of changesin equity is required to provide, the recognized but unrealized gains and losses arepresented, the implementation of new guide line reflects the comprehensive income theoryin a certain extent. In2009, the concepts of comprehensive income and othercomprehensive income were defined, the presentation was adjusted, and convergence withinternational accounting standards was achieved. In the current environment, whethercomprehensive income view is really suitable for the development of our capital market,whether comprehensive income improves the usefulness of accounting information, furtherresearch and testing are needed.This paper takes related notification as an opportunity, firstly do standard research onthe comprehensive income theory and the theoretical premise of value relevance ofaccounting information, then do empirical research on the sample data of Shanghai A stockmarket listing corporation2009—2011years. Based on the price model, research modelsare constructed, linear regression test is implemented on the value relevance of traditionalnet profit, total comprehensive income and other comprehensive income. The conclusionsof this study are: Comprehensive income and traditional net profit have value relevance,compared with the traditional net profit, the value relevance of comprehensive income islow; Decompositions of the comprehensive income have more value relevance than totalcomprehensive income; Other comprehensive income does not have incremental valuerelevance; Gains and losses directly recorded in the owner’s equity are separately presentedunder other comprehensive income will improve the value relevance of accountinginformation; comprehensive income value relevance has sustained growth trend.According to the conclusions of this study, several policy recommendations are puttedforward: Increase the propaganda of comprehensive income concept and improveunderstanding of the comprehensive income; Improve the relevant standards andspecifications, strengthen the comprehensive income effect; Increase conservatism principle’s maneuverability and strengthen supervision; Improve financial analysis andevaluation indexes; In order to strengthen the importance, gains and losses are added intothe accounting elements; Make the corresponding adjustments to the presentation ofcontent and structure of comprehensive income in the profit statement.