The Impact Of Other Comprehensive Income Fluctuations On Financing Activities

One of the most important changes in the development process of the convergence of accounting standards in our country is the introduction of the concept of comprehensive income and other comprehensive income,which reflects the more relevant accounting information quality requirements guided by decision-making usefulness in the view of assets and liabilities.It is worth studying how the accounting information of other comprehensive earnings will affect the users of financial information.Other comprehensive income accounting for financial assets and equity investment reflects the value-added or derogatory situation of the equity investment in the market,which indirectly reflects the ability of enterprises to invest in the financial assets in the current period,and provides an effective supplement to the investment income information.The accounting of conversion differences and cash flow hedge of foreign currency statements reflects the impact of foreign exchange rate movements on the current period and the coping and managing ability in dealing with foreign exchange risk and interest rate movements.Therefore,other comprehensive income is the fluctuation of assets and liabilities caused by fluctuations of market price,foreign exchange and interest rate in a certain period.It is a comprehensive function of market and macro factor fluctuation.Due to the changes in the market envirornment and other factors,the income will show certain volatility,which will also transmit the risk information due to unstable income.Therefore.this thesis assumes that the volatility of other comprehensive income may be an indicator of the credit risk of investors and creditors.By studying the correlation between the cost of capital and other factors and other comprehensive income volatility in the process of financing activities,the thesis will explore whether investors and creditors can take the risk information transmitted by other comprehensive income as the basis for decision-making.This thesis aims to provide theoretical support for the risk characteristics of other comprehensive income,enrich the literature content of this aspect,and provide practical reference for accounting information users.The innovation point of this thesis is to select the credit risk Angle,widen the research subject,and comprehensively analyze the influence of other comprehensive income volatility on all financial information users including creditors.This thesis adopts the method of theoretical analysis,case analysis and empirical analysis.The theoretical analysis defines the concept of assets and liabilities and other comprehensive income,and expounds the principal-agent theory and information asymmetry theory.Through the analysis of the comprehensive income of Financial Street Holdings company,the case analysis has raised our thinking on how other comprehensive income affects the decision of shareholders and creditors.Therefore,we further adopt the empirical analysis method to study the influence of other comprehensive income volatility on financing costs and other factors in corporate financing activities by taking the listed companies in China as samples from 2012 to 2016.The study found that the volatility of other comprehensive income disclosed by listed companies in China has different influences on different financing activities of the company,among which the impact on equity investors and bond financing is significant,while other comprehensive income volatility has not been regarded as useful information related to enterprise risk by creditors.