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Open AccessArticle

Market Reaction to Other Comprehensive Income

Division of Accounting/Tax and Management Information Systems, Kyonggi University, 154-42 Gwanggyosan-ro, Yeongtong-gu, Suwon-si, Gyeonggi-do 16227, Korea
Sustainability 2018, 10(6), 1837;
Received: 30 April 2018 / Revised: 26 May 2018 / Accepted: 1 June 2018 / Published: 1 June 2018
(This article belongs to the Special Issue Application of Time Series Analyses in Business)
The comprehensive income statement was adopted as the standard type of financial statement in 2011, and other comprehensive income (OCI) was included in the text of the financial statements. While OCI (unrealized income) is less sustainable than net income, it can help to assess a firm’s value. Therefore, testing the usefulness of OCI is important in analyzing whether persistence of earning information affects a firm’s value. The text of the financial statements enables market participants to access not only the realized net income (operating income, non-operating income), but also information on comprehensive income, which has not yet been realized. Although levels of realized and unrealized income indicate an increase in net worth, changes in realized and unrealized income differ in terms of uncertainty; it is, therefore, more important for market participants to judge information’s usefulness. This study examines whether OCI increases earnings response coefficients (ERC). We analyzed the information content of OCI before and after international financial reporting standards (IFRS) to verify whether the information content varies as the format of OCI reporting changes from a footnote to the main text of the financial statement. In addition, we analyzed dividing OCI into positive OCI and negative OCI. The analysis showed that under the condition in which the realized income is constant, OCI (which is unrealized earnings) has additional information effects. This means that differences might be observed in the decision-making process depending on whether or not the OCI information is used. View Full-Text
Keywords: other comprehensive income; earnings response coefficient; earning’s sustainability; international financial reporting standards (IFRS) other comprehensive income; earnings response coefficient; earning’s sustainability; international financial reporting standards (IFRS)
MDPI and ACS Style

Park, H. Market Reaction to Other Comprehensive Income. Sustainability 2018, 10, 1837.

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