Title: Assessing the value relevance of total comprehensive income under IFRS: an empirical evidence from European stock exchanges

Authors: Alain Devalle; Riccardo Magarini

Addresses: Faculty of Economics and Business, University of Turin, C.so Unione Sovietica 218 bis – 10134 Turin, Italy. ' Faculty of Economics and Business, University of Turin, C.so Unione Sovietica 218 bis – 10134 Turin, Italy

Abstract: This paper compares the value relevance of the net income and the total comprehensive income reported under IFRSs. The total comprehensive income represents a key measure of the overall company performance, and it is extremely topical after the revision of the IAS 1. The paper aims at verifying whether the total comprehensive income is more value relevant than the net income. To this purpose, accounting and market data regarding companies listed on the UK, French, German, Spanish and Italian stock exchanges have been collected for the years 2005-2007. Valuation models have been used to assess the differences in value relevance by using total comprehensive income or net income. Findings show that total comprehensive income has not resulted in an unquestionable increase in value relevance compared with net income. This research contributes to defining the relevance of the total comprehensive income and to the international debate about which overall company performance should be reported in the IFRS financial statement.

Keywords: total comprehensive income; net income; value relevance; IFRS; performance evaluation; Europe; stock exchanges; stock markets; UK; United Kingdom; France; Germany; Spain; Italy; valuation models; company performance.

DOI: 10.1504/IJAAPE.2012.043965

International Journal of Accounting, Auditing and Performance Evaluation, 2012 Vol.8 No.1, pp.43 - 68

Available online: 21 Nov 2011 *

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