Presentation Prominence: Does It Matter to Non-Professional Investors? The Case of ‘Other Comprehensive Income’
40 Pages Posted: 31 Mar 2022 Last revised: 15 Feb 2023
Date Written: April 1, 2022
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: Suggested Citation