TY - JOUR
T1 - Information content of other comprehensive income and net income
T2 - Evidence for Japanese firms
AU - Kubota, Keiichi
AU - Suda, Kazuyuki
AU - Takehara, Hitoshi
N1 - Funding Information:
# Corresponding author: Keiichi Kubota, Graduate School of Strategic Management, Chuo University, 1-13-27, Kasuga, Bunkyo-ku, Tokyo, Japan 112-8551. Email addresses: kekubota@tamacc.chuo-u.ac.jp and kubota@cc.musashi.ac.jp * The authors thank an anonymous referee of this journal for valuable suggestions and comments. To our deepest regret, our co-author Kazuyuki Suda passed away on May 31, 2011. We dedicate this paper to him. This paper was presented at the 2008 Japan Accounting Association Annual Meeting, the 2008 Asian Finance Association/Nippon Finance Association Joint Conference, the 2007 Asian Academic Accounting Association Meeting, the 2007 American Accounting Association Annual Meeting, the 2007 European Accounting Association Meeting, the 2006 WCAE/IAAER Congress, and a workshop at Carnegie Mellon University. The authors thank Zhaoyang Gu, Yuji Ijiri, Naoyuki Kaneda, Carolina Koornhof, Carolyn Levine, Takashi Obinata, Mayumi Takahashi, Akira Usui, Takashi Yaekura, Guochang Zhang, and Hiromi Wakabayashi for their helpful comments and discussion. The authors also thank Gary Biddle for private correspondence. The authors are grateful for the financial support of the Grant-in-Aid for Scientific Research from the Japan Society for the Promotion of Science. All remaining errors are our own.
PY - 2011/8
Y1 - 2011/8
N2 - This paper investigates information content of net income, other comprehensive income items, and "pseudo" comprehensive income for Japanese firms. The relative information content test demonstrates we cannot distinguish between net income and other alternative comprehensive income numbers. The incremental information content test shows other comprehensive income items have significant information content. The signs are counterintuitive, but we find the stock market reactions to other comprehensive income items are related to the degree of firms' foreign dependency and on the magnitude of the ratio of available-for-sale securities to equities in a meaningful way. We conclude that comprehensive income and other comprehensive income are useful to disclose.
AB - This paper investigates information content of net income, other comprehensive income items, and "pseudo" comprehensive income for Japanese firms. The relative information content test demonstrates we cannot distinguish between net income and other alternative comprehensive income numbers. The incremental information content test shows other comprehensive income items have significant information content. The signs are counterintuitive, but we find the stock market reactions to other comprehensive income items are related to the degree of firms' foreign dependency and on the magnitude of the ratio of available-for-sale securities to equities in a meaningful way. We conclude that comprehensive income and other comprehensive income are useful to disclose.
KW - Comprehensive income
KW - Japanese gaap
KW - Other comprehensive income
KW - Relative and incremental information content test
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U2 - 10.1080/16081625.2011.9720879
DO - 10.1080/16081625.2011.9720879
M3 - Article
AN - SCOPUS:83755180291
SN - 1608-1625
VL - 18
SP - 145
EP - 168
JO - Asia-Pacific Journal of Accounting and Economics
JF - Asia-Pacific Journal of Accounting and Economics
IS - 2
ER -