The Research On The Value Relevance Of Other Comprehensive Income Reclassification Of The Financial Industry

In 1997,FASB released SFAS No.130,which put forward other comprehensive income reclassification.Then both IASB and FASB discussed other comprehensive income reclassification successively,but the discussions did not reach the essence of it.With the comprehensive convergence of CAS to International Accounting Standards,Ministry of Finance of the People's Republic of China released CAS 30 in 2014,which defined other comprehensive income reclassification but did not clarify when to reclassify and criterions to reclassify.Both current profits and losses and other comprehensive income are measures of financial performances,and the other comprehensive income reclassification could make them connected.Researching on the value relevance of other comprehensive income reclassification could provide empirical evidences to the consistent convergence and improvements of CAS 30,and it is of great significance to report the financial performances of corporations.Based on financial listed companies disclosing reclassification of available-for-sale assets fair value changes from 2010 to 2015,the research finds out other comprehensive income has value relevance and explanation ability to the excess rate of return;it also has the consistent predictive ability to companies' future net profits,because companies make use of other comprehensive reclassification to smooth earning;smoothing earnings is one of the ways of real earnings management,and institutional investors works as the supervisors of corporate governance by restraining real earnings management,the research fins out institutional investors holdings do not have inhibiting effect on earning-smoothing.Although other comprehensive income reclassification has the value relevance and predictive ability to the future performance,researches on the topic have just started in recent years.To discuss essential differences between current profits and losses and other comprehensive income and standards of other comprehensive income,gains and losses should be added as accounting elements in Chinese Accounting Standards;distinct between current profits and losses and other comprehensive income;clarify standards of other comprehensive income reclassification;and normalize the information disclosure of other comprehensive income reclassification;participate in the international standards-setting.