Study On The Relation Of Other Comprehensive Income Disclosure To Analysts' Earnings Forecast Errors And The Influence Factors

Since 2009,it has made the further convergence between China's Accounting Standards and International Financial Reporting Standards with the application of other comprehensive income in China.Other comprehensive income items can reflect companies' unrealized gains,providing complete information on earnings for financial report users.However,the reclassification of other comprehensive income also increases the difficulty for the report users to interpret the earnings information to some extent.The securities analyst,as an information intermediary,can provide valuable information to the capital market using professional skills and information comparative advantages.Therefore,it is worth to explore further whether other comprehensive income disclosure can help the securities analyst has a better understanding of the accounting information.This thesis states the necessity of reporting other comprehensive income based on accounting objective theory,economic income theory,all-inclusive concept,assetliability view,and clean surplus theory.According to quality characteristics of financial information and the nature of other comprehensive income reclassification,in addition,this thesis interprets the rationality that analysts can apply reported other comprehensive earnings to forecast future earnings.Further,standing on principalagent theory,the thesis discusses the influence of managers' self-interested behavior on the companies' earnings as well as analyses the effect of the earnings quality and the internal and external supervision mechanisms on how securities analysts understand other comprehensive income.This thesis applies a sample of Chinese A-share listed companies over the period 2009–2016 to test the research hypotheses empirically,including the predictive ability of other comprehensive income,the relationship between disclosure of other comprehensive income and analysts' earnings forecast errors,and the influence factors on the relation of other comprehensive income disclosure to analysts' earnings forecast errors.The results include other comprehensive income has the ability to predict future earnings;analysts' earnings forecasts can reflect previous other comprehensive income information;analysts are better able to forecast earnings for companies which disclose other comprehensive income previously;other comprehensive income disclosure can reduce the bias of analysts' earnings forecasts;earnings management has a significant effect on the relation of other comprehensive income to analysts' earnings forecast errors;the external audit,corporate governance,and marketization process also have a significant role in adjusting the relationship between other comprehensive income and analysts' earnings forecast errors.According to the results,the thesis put forward relative policy suggestions,including the improvement of other comprehensive income disclosure requirements by Chinese accounting standard setters,the optimisation of corporate governance mechanism by listed companies,the enhancement of regulating function by external stakeholders such as auditors,and the promoting of marketization process by the nation.This thesis explores the decision-usefulness of other comprehensive income by the securities analysts,not only provides a new research idea for the study of other comprehensive income information content but extends the theoretical research in the field of the analysts' earnings forecast.