Experimental Study For The Effects Of Comprehensive-income Presentation Format On Nonprofessional Investors’ Judgments

The mode of traditional accounting income shift to comprehensive incomegradually, because of the changing of economic environment. The comprehensiveincome presentation formats have been corrected since the beginning of comprehensiveincome standards. An experiment is designed to study whether the presentation format ofcomprehensive income will impact investors’ valuation judgments. The experiment is onthe basis of Financial Accounting Standard Board No.130. The understanding of currentinvestors to comprehensive income also is considered. Then an advice was given to thenon-professional investors.Firstly, the relevant literature of assess judgment, the impact of the format ofcomprehensive income and non-professional investors are reviewed. Secondly, the paperanalyzes the level of understanding of non-professional investors to comprehensiveincome by questionnaires. Then two underlying assumptions are proposed on the basis ofrelated theories. A2×2experiment is designed in order to verify whether investors willbe affected by the presentation format. The study analyzes the impact arising frominformation acquisition and evaluation mainly. Finally, the data of experiment are testedand proved that the results in line with the original hypothesis.Experiment results show that the presentation format have no effect to non-professional investors, when they acquire the location and evaluate the volatility of UGL.In other words, non-professional investors can point out the location of UGL anddetermine the level of volatility accurately, regardless of comprehensive income isreported in a statement of comprehensive income or a statement of stockholders’ equity.