The value relevance of comprehensive income (CI) compared to net income (NI) remains unresolved. We look at this issue in the Canadian market, using association methods to determine the value relevance of reporting CI and other comprehensive income (OCI) components for stock prices and returns. The sample consists of all the firms in the S&P/TSX Composite Index that prepared their financial statements according to Canadian standards or International Financial Reporting Standards (IFRS) over the 2008–2016 period. Although we find no evidence that CI is more value relevant than NI for stock prices and returns, we note that some OCI components are incrementally value relevant beyond NI for both amounts. In addition, financial services firms differ from other companies in terms of the relationships between some of their OCI components and prices or returns, with such firms even driving some relationships. Relationships between OCI components and prices or returns are also affected when data from the financial crisis period are excluded, with some relationships even changing after IFRS adoption. These results inform Canadian standard setters and financial statement users that OCI components are decision useful for the Canadian market.

One of the major aims of accounting information is its usefulness in decision-making and in assessing the value of a company. To this end, a vast theoretical and empirical literature has examined the relationship between accounting information and the company's market value. In this article, we discuss the evolution of this research stream from its origins to the present by outlining the main conclusions. We also review research on the assessment of the company value through accounting determinants. In particular, we examine Ohlson's Clean Surplus valuation model, discussing its strengths and limitations. The analysis of the conclusions of this research stream provides insights into company valuation through accounting data that are likely to be useful to financial market participants and accounting standard setters.

No abstract

No abstract