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Comprehensive Income and Net Income, Which is more powerful in predicting Future Performance

Author

Listed:
  • Ashraf Bataineh
  • Abedalqader Rababah
  • abedalqader.rababah@gmail.com

Abstract

The aim of this research is to compare the ability of comprehensive income and net income to predict companies' future performance in emerging markets by studying industrial companies in Jordan, and to achieve the purpose of the study a sample of (29) companies listed in Amman Stock Exchange from industrial sector has been selected with (146) observation for the time period of (2011-2015), a multiregression testing technique has been used using (SPSS), to find out the usefulness of both net income and comprehensive income to the financial information users and to confirm which one of them is more powerful in predicting of the future performance. The results show that the current net income has more predictive power for future income and future comprehensive income than current comprehensive income. Also the results show that even thought that total comprehensive income possesses more informative content and gives further information, but still the net income is more powerful in predicting future performance.

Suggested Citation

  • Ashraf Bataineh & Abedalqader Rababah & abedalqader.rababah@gmail.com, 2016. "Comprehensive Income and Net Income, Which is more powerful in predicting Future Performance," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 6(2), pages 114-120, April.
    • Handle: RePEc:hur:ijaraf:v:6:y:2016:i:2:p:114-120
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    References listed on IDEAS

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    1. Steven F. Cahan & Stephen M. Courtenay & Paul L. Gronnewoller & David R. Upton, 2000. "Value Relevance of Mandated Comprehensive Income Disclosures," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 27(9‐10), pages 1233-1265, November.
    2. Dhaliwal, Dan & Subramanyam, K. R. & Trezevant, Robert, 1999. "Is comprehensive income superior to net income as a measure of firm performance?1," Journal of Accounting and Economics, Elsevier, vol. 26(1-3), pages 43-67, January.
    3. Steven F. Cahan & Stephen M. Courtenay & Paul L. Gronnewoller & David R. Upton, 2000. "Value Relevance of Mandated Comprehensive Income Disclosures," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 27(9&10), pages 1273-1302.
    4. Hirst, DE & Hopkins, PE, 1998. "Comprehensive income reporting and analysts' valuation judgments," Journal of Accounting Research, Wiley Blackwell, vol. 36, pages 47-75.
    5. Wang, Yue & Buijink, Willem & Eken, Rob, 2006. "The value relevance of dirty surplus accounting flows in The Netherlands," The International Journal of Accounting, Elsevier, vol. 41(4), pages 387-405, 012.
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