A critical analysis of the empirical researches on Comprehensive Income value relevance

The issuing of the SFAS 130 in 1997 and subsequently of the revision of IAS 1 in2007 became current again the long-standing debate between the ‘all-inclusive’ (or‘comprehensive income’) and ‘current operating’ performance concepts. The accountingstandards required firms to report in the financial statements the Comprehensive Income(CI), as the sum of net income (NI) and other comprehensive income (OCI) components.Empirical studies tried to provide evidence of the value relevance for investors of CI/OCIinformation. Previous archival researches document mixed evidence, and the majority ofthem has not found consistent support for the value relevance of CI/OCI and itscomponents. The main aim of the paper is to investigate whether the aggregate CI/OCIprovide investors with an added value in terms of information content with respect to NI bycritically analyzing the findings of previous researches under three main key researchaspects: value relevance test, value relevance approach, OCI measures. In sum, ourcontribution to the CI value relevance literature lies in the critical analysis of the mainextant studies, and in systematizing archival research providing some reflections on thereasons why of the mixed results.