Comprehensive Income in Italy: reporting format used, nature of OCI items and its effects on company performance

The aim of this paper is to investigate the actual behaviours of companies listed on the Italian Stock Exchange as regards how they report comprehensive income (CI) in their financial statement as well as the impact of CI on the main indicators of company performance. The study is based on the documentary analysis of the consolidated financial statements of 160 groups including industrial sectors that on 31st December, 2009 were quoted on the Italian Stock Exchange. The research, one of the first in Italy to investigate the reasons behind the choices of accounting format to represent comprehensive income, seeks to verify the relation- if any- between the choice made and the direction and size of the OCI components. The results show that the majority of companies in the sample opted for the presentation of comprehensive income in two separate and successive documents, thereby maintaining the distinction between income realised and income as yet unrealised, without clouding the traditional account with large amounts of a transitory nature. Moreover, from the study carried out, it emerges that there is a correlation between the form of accounting and the direction and size of OCI components. Finally, although net income remains the base value for estimating EPS and ROE, the simulations conducted show how, in many cases, the results of the analysts would change if they based their estimates on OCI results.