The Effects Of Comprehensive Income And Its Structure On Firm Value

With the continuous improvement of securities market system and market regulation, some changes have happened in investors’ philosophy, and value investment concept was refocused by more and more investors. During the process of investment, financial statements are the first concern of most investors on value judgment. In 2006, the Ministry of Finance, P. R. China issued the new accounting system which standardized the presentation of financial statements. In 2009, China’s Ministry of Finance issued interpretation of NO.3 of CAS, which claims that all the listed firms should add comprehensive income in income statement. Therefore, this adjustment brings new problem to these value-investing groups, whether it contributes to their value jugdement. This problem has attracted widespread attention from value-investing groups and also became an urgent-solved problem, when CAS gived a clear definition for comprehensive income in 2014.Under the premise of the explicit and related research background, we divide comprehensive income into operating cash flow, accrued income and other comprehensive income according to its structure character. Based on A share listed companies from Shanghai Stock Exchange and Shenzhen Stock Exchange, our research propose five research hypotheses in order to study the value relevance of comprehensive income, operating cash flow, accrued income, other comprehensive income and the moderating effect of firm growth rate. In this study, an empirical design and literature research method are adopted. The data we used from 2010 to 2013 are collected from CSMAR database and some are acquired by manual computation. The hypotheses are examined with multiple linear regressions through Stata11.0 and SPSS statistical software.The results show that comprehensive income, operating cash flow, accrued income and other comprehensive income are significantly positive related to firm value. Finally, we found that firm growth rate moderate the relationship between the comprehensive income and firm value, the lower the corporation growth rate, the stronger the relationship it will be.