IDEAS home Printed from https://ideas.repec.org/a/eme/arjpps/v24y2011i3p268-289.html
   My bibliography  Save this article

Properties of net income and total comprehensive income: New Zealand evidence

Author

Listed:
  • M. Humayun Kabir
  • Fawzi Laswad

Abstract

Purpose - The purpose of this paper is to investigate the properties of net income (NI) and total comprehensive income (TCI) of listed companies in New Zealand (NZ). Four properties of TCI and NI are examined: persistence, variability, predictive ability, and value relevance. Whether the value relevance of TCI depends on its reporting location is also investigated. Design/methodology/approach - A cross‐sectional research design is used with data on TCI reported by NZ listed companies in 2010 under the new disclosure requirement in IAS 1. Ordinary least squares (OLS) regressions are used with a sample of 86 firms to test for persistence, variability, and predictive ability, and 81 firms to test for value relevance of NI and TCI. Findings - The study finds: NI is potentially more persistent than TCI and potentially explains contemporaneous stock returns better than TCI; no significant difference in the variability and predictive ability of NI and TCI; little evidence that the value relevance of TCI depends on its reporting location; other comprehensive income (OCI) has incremental ability to predict one‐year‐ahead CFO, although the incremental ability of OCI to predict one‐year‐ahead NI is not statistically significant; and OCI is not incrementally value relevant. Practical implications - The findings would be of interest to securities analysts and other users in valuing firms and when earnings are used in contractual settings (e.g. management compensation). Further, the results would also be of potential interest to standard‐setters. Originality/value - The literature on comprehensive income is growing. However, the authors are not aware of any study that investigates the properties of NI and TCI in accordance with the new requirement to report comprehensive income in the amended IAS 1 which came into effect in NZ on January 1, 2009. The paper adds current evidence on the properties of NI and TCI under IFRS to the international literature.

Suggested Citation

  • M. Humayun Kabir & Fawzi Laswad, 2011. "Properties of net income and total comprehensive income: New Zealand evidence," Accounting Research Journal, Emerald Group Publishing Limited, vol. 24(3), pages 268-289, November.
    • Handle: RePEc:eme:arjpps:v:24:y:2011:i:3:p:268-289
    DOI: 10.1108/10309611111187000
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/10309611111187000/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://www.emerald.com/insight/content/doi/10.1108/10309611111187000/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1108/10309611111187000?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Carmen- Alexandra BALTARIU, 2015. "The Current State Of Knowledge In The Value Relevance Research Field," SEA - Practical Application of Science, Romanian Foundation for Business Intelligence, Editorial Department, issue 7, pages 13-20, April.
    2. Pier Luigi Marchini & Carlotta D'Este, 2015. "Comprehensive Income: which potential effects on firms? performance evaluation and users? decision process?," FINANCIAL REPORTING, FrancoAngeli Editore, vol. 2015(2), pages 55-94.
    3. Allan Hodgson & Mark Russell, 2014. "Comprehending Comprehensive Income," Australian Accounting Review, CPA Australia, vol. 24(2), pages 100-110, June.
    4. Kimouche Bilal, 2021. "Persistence and Predictive Ability of Earnings: Evidence from France and the UK," Economics and Business, Sciendo, vol. 35(1), pages 190-200, January.
    5. Marhaendra Kusuma & Diana Zuhroh & Prihat Assih & Grahita Chandrarin, 2021. "The Effect of Net Income and Other Comprehensive Income on Future¡¯s Comprehensive Income With Attribution of Comprehensive Income as Moderating Variable," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 12(3), pages 205-219, May.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:arjpps:v:24:y:2011:i:3:p:268-289. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.