Value-relevance of pension transition adjustments and other comprehensive income components in the adoption year of SFAS No. 158

Mitra, Santanu; Hossain, Mahmud

doi:10.1007/s11156-009-0112-4

Cited by 49 publications

(26 citation statements)

References 24 publications

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“…Finally, in order to identify which comprehensive income components are more value relevant, we have broken down the total comprehensive income into its components (as stated by IAS 1). The PRM is modified to include the new independent variables (as Mitra and Hossain, 2009;Kanagaretnam et al, 2009;Ernstberger, 2008;Goncharov and Hodgson, 2008) and it is specified as follows (comprehensive price regression model -CPRM): Table 3 reports descriptive statistics for the variables included in the regression models. A two-group means comparison test (t-test) has been run to assess whether the differences among country means are significant.…”

Section: Methodsmentioning

confidence: 99%

Assessing the value relevance of total comprehensive income under IFRS: an empirical evidence from European stock exchanges

Devalle

Magarini

2012

IJAAPE

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This paper compares the value relevance of the net income and the total comprehensive income reported under IFRSs. The total comprehensive income represents a key measure of the overall company performance, and it is extremely topical after the revision of the IAS 1. The paper aims at verifying whether the total comprehensive income is more value relevant than the net income. To this purpose, accounting and market data regarding companies listed on the UK, French, German, Spanish and Italian stock exchanges have been collected for the years 2005-2007. Valuation models have been used to assess the differences in value relevance by using total comprehensive income or net income. Findings show that total comprehensive income has not resulted in an unquestionable increase in value relevance compared with net income. This research contributes to defining the relevance of the total comprehensive income and to the international debate about which overall company performance should be reported in the IFRS financial statement.

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Section: Methodsmentioning

confidence: 99%

Assessing the value relevance of total comprehensive income under IFRS: an empirical evidence from European stock exchanges

Devalle

Magarini

2012

IJAAPE

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“…In a market-based study, Pronobis and Zülch (2012) found that actuarial gains and losses have no value relevance, but merely add noise for the prediction of subsequent period's net income and CI. Although their study does not directly relate to actuarial gains and losses, Mitra and Hossain (2009) conversely found value relevance for the pension transition adjustments in the initial adoption year of SFAS 158 Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans. They documented the stock market's negative reaction to the adverse impact of pension transition adjustments (recorded in accumulated CI) on net worth and future cash flows.…”

Section: Actuarial Gains and Losses As An Oci Itemmentioning

confidence: 90%

Comprehensive income information: a user's perspective

Durocher¹,

Fortin²

2015

IJBAF

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Abstract:The goal of this experimental study was to examine whether nonprofessional investors actually use comprehensive income (CI) in their financial calculations and analyses. We assessed how these actors process actuarial gains and losses on defined benefit pension plans as an "other comprehensive income" (OCI) item, and whether the presentation format for CI affects their judgements and decisions, while considering the directional impact of the OCI item (actuarial loss or actuarial gain). Using 125 Canadian MBA students as proxies for nonprofessional investors, we conclude that nonprofessional investors generally do not use CI, are not affected by its presentation format, and are influenced in relatively few of their judgements by the direction of the OCI item's impact. These findings have important implications for standard setters, who may wish to better conceptualise the CI concept and revisit their current emphasis on CI information.

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“…Pinto (2005) and Bae et al (2008) also report that foreign currency transaction adjustments are significantly value relevant when their parameter estimates are allowed to vary in cross-sections. Mitra and Hossain (2009) show that projected pension obligation adjustments are negatively related to stock returns and this relationship is more profound for large firms. Jones and Smith (2011) report that specific OCI item information has predictive value and is value relevant to investors' decisions.…”

Section: Literature Reviewmentioning

confidence: 95%

Analyst Following, Information Environment and Value Relevance of Comprehensive Income: Evidence from China

Lin

2015

Asia-Pac J of Fin Stud

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This study investigates the value relevance of comprehensive income (CI) reporting contextual to the specific market and financial reporting environment in China. We posit the information content of CI or other comprehensive incomes (OCI) is affected by the information environment. By applying analyst coverage as a main proxy for firms' information environment, this study finds that analyst following contributes to reducing information asymmetry and increasing information preciseness and investors' comprehension, thus it is positively associated with the value relevance of CI or OCI information. We also document that a few OCI items have incremental explanatory power to firm valuation in the Chinese market, which is mainly for those firms with greater analyst coverage. We therefore conclude that the information environment should be taken into consideration in evaluating the value relevance of CI reporting.

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Value-relevance of pension transition adjustments and other comprehensive income components in the adoption year of SFAS No. 158

Abstract: SFAS No. 158, Pension transition adjustments, OCI components, Earnings measures, Stockholders’ equity, Stock returns, Valuation implication, M40, M41,

Cited by 49 publications

References 24 publications

Assessing the value relevance of total comprehensive income under IFRS: an empirical evidence from European stock exchanges

Assessing the value relevance of total comprehensive income under IFRS: an empirical evidence from European stock exchanges

Comprehensive income information: a user's perspective

Analyst Following, Information Environment and Value Relevance of Comprehensive Income: Evidence from China

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