Comprehensive Income: How Is It Being Reported And What Are Its Effects?

Abstract

<p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt;"><span style="font-size: x-small;"><span style="font-family: "Times New Roman","serif"; letter-spacing: -0.15pt;">SFAS No. 130 allows three format choices for reporting </span><span style="font-family: "Times New Roman","serif";">comprehensive income (CI); two involve reporting CI in a performance-based financial statement, while the third option incorporates it into a statement of changes in stockholders' equity (SCSE).<span style="mso-spacerun: yes;">  </span>Prior research suggests that reporting CI in the latter option results in less useful information for investors.<span style="mso-spacerun: yes;">  </span>This study examines CI reporting for a sample of financial service firms and demonstrates that a majority (63%) of them chose a SCSE format.<span style="mso-spacerun: yes;">  </span>In addition, a significant association existed between both the direction and size of the components of other comprehensive income and the format chosen.<span style="mso-spacerun: yes;">  </span></span></span></p>