Presentation prominence: Does it matter to non-professional investors? The case of ‘Other Comprehensive Income’

40 Pages Posted: 31 Mar 2022 Last revised: 27 Sep 2022

See all articles by Daifei (Troy) Yao

Daifei (Troy) Yao

Queensland University of Technology - QUT Business School

Xin Qu

Queensland University of Technology

Tyge Kummer

Queensland University of Technology

Date Written: April 1, 2022

Abstract

International Accounting Standard 1 Presentation of Financial Statements requires companies to include other comprehensive income (OCI) in the performance statement. Previous research argues that the OCI items in the Statement of Comprehensive Income confuse financial statement users and suggests improving the OCI presentation format. Using an experimental method (N=128), we find that labelling of OCI and the financial position of the company influences non-professional investors’ assessments and evaluation of financial information. Overall, our results indicate that improving the presentation of the OCI items enhances the decision-usefulness of financial information. These results have important practical implications for standard setters and financial statement users.

Keywords: Other comprehensive income, Financial statement presentation, Accounting standard setting, Judgement, Non-professional investors

JEL Classification: M41

Suggested Citation

Yao, Daifei (Troy) and Qu, Xin and Kummer, Tyge, Presentation prominence: Does it matter to non-professional investors? The case of ‘Other Comprehensive Income’ (April 1, 2022). AASB Research Centre Working Paper 2, Available at SSRN: https://ssrn.com/abstract=4071431 or http://dx.doi.org/10.2139/ssrn.4071431

Daifei (Troy) Yao (Contact Author)

Queensland University of Technology - QUT Business School

GPO Box 2434
Brisbane, 4001
Australia

Xin Qu

Queensland University of Technology ( email )

2 George Street
Brisbane, Queensland 4000
Australia

Tyge Kummer

Queensland University of Technology ( email )

2 George Street
Brisbane, Queensland 4000
Australia

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