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Testing the Information Set Perspective of UK Financial Reporting Standard No.3: Reporting Financial Performance

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  • Stephen Lin

Abstract

This study investigates whether a broader range of financial performance measures as required by FRS No.3 (FRS3) provides incremental price information beyond a single earnings‐based performance measure. I find that the additional performance components reported in the layered statement of performance and reconciliation of movements in shareholders' funds and alternative earnings per share that are voluntarily disclosed by UK firms are generally associated with share returns, and provide incremental price information beyond FRS3 all‐inclusive earnings. This finding supports the information set perspective underlying FRS3, and has important implications for setting a global accounting standard on reporting financial performance.

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  • Stephen Lin, 2006. "Testing the Information Set Perspective of UK Financial Reporting Standard No.3: Reporting Financial Performance," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 33(7‐8), pages 1110-1141, September.
    • Handle: RePEc:bla:jbfnac:v:33:y:2006:i:7-8:p:1110-1141
    DOI: 10.1111/j.1468-5957.2006.00595.x
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    References listed on IDEAS

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    Cited by:

    1. Veltri, Stefania & Ferraro, Olga, 2018. "Does other comprehensive income matter in credit-oriented systems? Analyzing the Italian context," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 30(C), pages 18-31.
    2. Jacek Gad, 2016. "Information Transparency of the Statement of Comprehensive Income: The Reporting Practice of WIG30 and DAX Companies," Journal of Entrepreneurship, Management and Innovation, Fundacja Upowszechniająca Wiedzę i Naukę "Cognitione", vol. 12(3), pages 113-134.
    3. repec:dau:papers:123456789/1644 is not listed on IDEAS
    4. Wenjing Xu & Ming Qi, 2017. "Presentation Pattern and the Value Relevance of Comprehensive Income --- Evidence from China," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(6), pages 31-37, June.
    5. Eric Paget-Blanc & Joelle Marine Kamdem Kamne, 2017. "Pertinence de la comptabilisation en juste valeur pour les banques africaines : une étude empirique," Post-Print hal-01907616, HAL.
    6. Allan Hodgson & Mark Russell, 2014. "Comprehending Comprehensive Income," Australian Accounting Review, CPA Australia, vol. 24(2), pages 100-110, June.
    7. Malikov, Kamran & Manson, Stuart & Coakley, Jerry, 2018. "Earnings management using classification shifting of revenues," The British Accounting Review, Elsevier, vol. 50(3), pages 291-305.
    8. Papanastasopoulos, Georgios A., 2015. "Accruals, growth, accounting distortions and stock returns: The case of FRS3 in the UK," The North American Journal of Economics and Finance, Elsevier, vol. 33(C), pages 39-54.
    9. Schaberl, Philipp D. & Victoravich, Lisa M., 2015. "Reporting location and the value relevance of accounting information: The case of other comprehensive income," Advances in accounting, Elsevier, vol. 31(2), pages 239-246.

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