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Does the Reporting Location of Other Comprehensive Income Matter? The Investor's Perspective

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  • Xin Wang
  • Haiyan Jiang
  • Meiting Lu

Abstract

In the context of changes mandated by the Chinese Ministry of Finance in January 2009 regarding the location in which other comprehensive income (OCI) is reported, this paper finds that reporting OCI on the performance statement significantly improves its value relevance. The improvement is driven by two OCI items: unrealised holding gains/losses on available‐for‐sale securities and the share of other comprehensive income of investees under the equity method. Our results show that the OCI reporting location matters, which supports the psychological perspective that investors pay more attention to salient information. Our findings lend strong support to the approach of standard setters in reporting OCI on the performance statement.

Suggested Citation

  • Xin Wang & Haiyan Jiang & Meiting Lu, 2019. "Does the Reporting Location of Other Comprehensive Income Matter? The Investor's Perspective," Australian Accounting Review, CPA Australia, vol. 29(3), pages 546-555, September.
    • Handle: RePEc:bla:ausact:v:29:y:2019:i:3:p:546-555
    DOI: 10.1111/auar.12230
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    Cited by:

    1. Murad Harasheh & Federica Doni & Maria Vittoria Franceschelli & Andrea Amaduzzi, 2021. "The value relevance of Other Comprehensive Income: Extensive evidence from Europe," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(3), pages 3835-3851, July.
    2. Zeting Zang & Humayun Kabir & Tom Scott, 2022. "Does OCI Presentation for Equity Financial Assets Matter?," Australian Accounting Review, CPA Australia, vol. 32(4), pages 427-439, December.
    3. Inês Pinto & Ana Isabel Morais, 2022. "Classification of Equity Instruments under IFRS 9: Determinants and Consequences," Australian Accounting Review, CPA Australia, vol. 32(4), pages 411-426, December.
    4. Abderrahmane Djaballah & Anne Fortin, 2021. "Value Relevance of Comprehensive Income for the Canadian Market," Accounting Perspectives, John Wiley & Sons, vol. 20(1), pages 49-77, March.
    5. Cao, Yuqiang & Li, Chenglin & Liu, Xinghe & Lu, Meiting & Shan, Yaowen, 2022. "Economic policy uncertainty and debt allocation within business groups," Economic Modelling, Elsevier, vol. 116(C).
    6. Maoli Ji & Yuguang Ji & Shulan Dong, 2022. "Environmental Accounting Information Disclosure Driving Factors: The Case of Listed Firms in China," Sustainability, MDPI, vol. 14(23), pages 1-23, November.
    7. Deli Wang & Ke Peng & Kaiye Tang & Yewei Wu, 2022. "Does Fintech Development Enhance Corporate ESG Performance? Evidence from an Emerging Market," Sustainability, MDPI, vol. 14(24), pages 1-21, December.
    8. Xijia Huang & Yiting Guo & Yuming Lin & Liping Liu & Kai Yan, 2022. "Green Loans and Green Innovations: Evidence from China’s Equator Principles Banks," Sustainability, MDPI, vol. 14(20), pages 1-20, October.
    9. Yuqiang Cao & Weiming Liang & Guocheng Yang & Jun Yin, 2022. "Judicial Independence and Domestic Supply Chain: Evidence from a Quasi-Natural Experiment," Sustainability, MDPI, vol. 14(24), pages 1-17, December.
    10. Jielin Jing & Jianling Wang & Qingjun Wu, 2022. "Litigation Risk and Corporate Social Responsibility—Evidence from a Poverty Alleviation Campaign in China," Sustainability, MDPI, vol. 14(22), pages 1-21, November.

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