Is comprehensive income superior to net income as a measure of firm performance?

Dhaliwal, Dan S.; Subramanyam, K.R.; Trezevant, Robert

doi:10.1016/s0165-4101(98)00033-0

Cited by 372 publications

(451 citation statements)

References 18 publications

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“…The final sample they used in the empirical analysis consists of 3716 entities, and business entities operating in the financial industry are excluded from the sample due to different accounting rules and disclosure requirements. Dhaliwal et al (1999) compare the ability of comprehensive income and net income to predict the future corporate performance. They conclude that comprehensive income is not a better predictor of future corporate performance than net income and state that the marketable securities adjustments, one of the components of comprehensive income, may enhance the ability of comprehensive income to summarize future financial performance.…”

Section: The Background Of Comprehensive Income Reporting and Past LImentioning

confidence: 99%

“…In this context, the equations used in the empirical analysis parallel with those of Biddle and Choi (2006), Kanagaretnam et al (2009), Pronobis and Zülch (2010) and Dhaliwal et al (1999).…”

Section: Table 2 Definition Of Variablesmentioning

confidence: 99%

“…The predictive ability of comprehensive income and other financial performance measures has been well documented for the developed economies ( Dhaliwal et al, 1999;Choi et al, 2007;Biddle and Choi, 2006). However, there are few studies regarding the predictive ability comprehensive income for the developing economies.…”

Section: Introductionmentioning

confidence: 99%

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How Well Does Comprehensive Income Measure Future Firm Performance Compared to Net Income? Evidence From Turkish Listed Firms

Özcan

2016

bmij

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Section: The Background Of Comprehensive Income Reporting and Past LImentioning

confidence: 99%

Section: Table 2 Definition Of Variablesmentioning

confidence: 99%

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How Well Does Comprehensive Income Measure Future Firm Performance Compared to Net Income? Evidence From Turkish Listed Firms

Özcan

2016

bmij

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“…Although the comprehensive result may carry the effects of accounting policies that are relevant to measure the performance of a company, this study chose to use profit for two main reasons. First, the empirically comprehensive result does not reflect a measurement of performance higher than profit for the period (Dhaliwal, Subramanyam & Trezevant, 1999) and second, before adopting international standards in Brazil, this was not a measure usually adopted.…”

Section: Final Remarksmentioning

confidence: 99%

Manager's Discretionary Power and Comparability of Financial Reports: An Analysis of the Regulatory Transition Process in Brazilian Accounting

Ribeiro

Carmo

Fávero

et al. 2016

Rev. contab. finanç.

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This research aimed to directly evaluate the impact of the accounting regulatory flexibility movement on the comparability of financial reports. The country chosen for the analysis was Brazil, because it was one of the few countries in the world where a process of regulatory change from a completely rule-based standard with a strong link to tax accounting (Lopes, 2011) to a principle-based standard with greater need for decision by managers who prepare the financial reports took place. To measure comparability, the accounting function similarity model developed by DeFranco, Kothari and Verdi (2011) was used. The companies analyzed were all listed ones with full data for the period concerned having, at least, a pair company within the same economic activity sector. To obtain the research results, we adopted a panel data model where the years 2005 to 2012 were compared to the year 2004. The results obtained prove that, on average, there was no significant decrease in the comparability level within country during the regulatory transition period in Brazil. On the contrary, there was an increase in genuine comparability in the year 2012 when compared to 2004. In the model adjusted by stepwise, the years 2011 and 2012 had a significantly higher average comparability when compared to 2004. The results found corroborate other researches addressing the quality of accounting information (Collins, Pasewark, & Riley, 2012;Psaros & Trotman, 2004;Agoglia, Doupnik, & Tsakumis, 2011) and prove the superiority of the principle-based standard also over the comparability of financial reports. The main conclusion of this research is that increasing manager's discretionary power through flexibility of accounting standards does not decrease the comparability of financial reports.

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“…Other studies to be mentioned include: Foster (1977); Board and Walker (1990); Strong and Walker (1993); Harris, Lang, and Moller (1994) ;Collins, Pincus, and Xie (1999); Francis and Schipper (1999) ;Dhaliwal, Subramanyam, and Trezevant (1999);Sarlo Neto (2004); Costa and Lopes (2007) ;Lopes, Sant' Anna, and Costa (2007); Galdi and Lopes (2008) ;Bastos, Nakamura, David, andRotta (2009), Malacrida (2009) and Zanini, Cañibano, and Zani (2010).…”

Section: Value Relevance: the Study Of The Relevance Of Accounting Inmentioning

confidence: 99%

Analysis of the Relevance of Information Content of the Value Added Statement in the Brazilian Capital Markets

Machado

Macedo

Machado

2015

Rev. contab. finanç.

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The usefulness of financial statements depends, fundamentally, on the degree of relevance of the information they disclose to users. Thus, studies that measure the relevance of accounting information to the users of financial statements are of some importance. One line of research within this subject is in ascertaining the relevance and importance of accounting information for the capital markets: if a particular item of accounting information is minimally reflected in the price of a share, it is because this information has relevance, at least at a certain level of significance, for investors and analysts of the capital markets. This present study aims to analyze the relevance, in the Brazilian capital markets, of the information content of the Value Added Statement (or VAS) -referred to in Brazil as the Demonstração do Valor Adicionado, or DVA. It analyzed the ratio between stock price and Wealth created per share (WCPS), using linear regressions, for the period 2005-2011, for non-financial listed companies included in Melhores & Maiores ('Biggest & Best'), an annual listing published by Exame Magazine in Brazil. As a secondary objective, this article seeks to establish whether WCPS represents a better indication of a company's result than Net profit per share (in this study, referred to as NPPS). The empirical evidence that was found supports the concept that the VAS has relevant information content, because it shows a capacity to explain a variation in the share price of the companies studied. Additionally, the relationship between WCPS and the stock price was shown to be significant, even after the inclusion of the control variables Stockholders' equity per share (which we abbreviate in this study to SEPS) and NPPS. Finally, the evidence found indicates that the market reacts more to WCPS (Wealth created per share) than to NPPS. Thus, the results obtained give some indication that, for the Brazilian capital markets, WCPS may be a better proxy concept for referring to a company's result than NPPS.

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Is comprehensive income superior to net income as a measure of firm performance?

Cited by 372 publications

References 18 publications

How Well Does Comprehensive Income Measure Future Firm Performance Compared to Net Income? Evidence From Turkish Listed Firms

How Well Does Comprehensive Income Measure Future Firm Performance Compared to Net Income? Evidence From Turkish Listed Firms

Manager's Discretionary Power and Comparability of Financial Reports: An Analysis of the Regulatory Transition Process in Brazilian Accounting

Analysis of the Relevance of Information Content of the Value Added Statement in the Brazilian Capital Markets

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