The value relevance of comprehensive income under IFRS and US GAAP: empirical evidence from Germany

Jurgen Ernstberger

International Journal of Accounting, Auditing and Performance Evaluation, 2008, vol. 5, issue 1, 1-29

Abstract: The IASB and FASB are currently conducting a project on performance reporting which broadly addresses the definition and presentation of income in financial statements. This study examines and compares the current practice of performance reporting under IFRS and US GAAP within a homogenous institutional setting. Therefore, it uses a sample of companies which were listed in the major segments of the German stock exchange during the period 2001–2004 and which voluntarily applied IFRS or US GAAP. The major results of our study are that: comprehensive income appears to provide no incremental value relevant information beyond net income in explaining stock returns; comprehensive income under IFRS provides more incremental value relevant information than comprehensive income under US GAAP; concerning the components of other comprehensive income, only unrealised gains and losses from available-for-sale financial assets in the IFRS sample are clearly incremental value relevant.

Keywords: comprehensive income; income components; International Accounting Standards; IAS; International Financial Reporting Standards; IFRS; performance reporting; United States Generally Accepted Accounting Principles; US GAAP; value relevance; German stock exchange; Germany; stock returns. (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (5)

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