Risk Relevance of Comprehensive Income

24 Pages Posted: 22 Dec 2012

Date Written: August 31, 2012


We examine the volatility and risk relevance of three income measures: net income, comprehensive income, and comprehensive income adjusted for asset revaluations for a sample of 79 New Zealand non-financial firms from 2003-2008. Comprehensive income is more volatile than net income and adjusted comprehensive income. There is a strong positive correlation between the three income volatility measures and market risk. However, the volatility of comprehensive income incremental to net income is not related to market risk. Furthermore, the incremental volatility of comprehensive income does not modify the pricing of net income. The results have policy implications for the IASB.

Keywords: Comprehensive Income, Income Volatility, Asset Revaluations, Risk, IFRS

JEL Classification: M41

Suggested Citation

Khan, Shahwali and Bradbury, Michael E., Risk Relevance of Comprehensive Income (August 31, 2012). 2013 Financial Markets & Corporate Governance Conference. Available at SSRN: https://ssrn.com/abstract=2192671 or http://dx.doi.org/10.2139/ssrn.2192671

Shahwali Khan

Massey University ( email )

Private Bag 11 222
Palmerston North, Manawatu 4442
New Zealand

Michael E. Bradbury (Contact Author)

Massey University ( email )

School of Accountancy
Private Bag 102 904
New Zealand
64 9 414 0800 (Phone)
64 9 441 8133 (Fax)

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