Exploring the usefulness of comprehensive income: an empirical study

Statement of Financial Accounting Standards (SFAS) No. 130 and the International Accounting Standards Board (IASB) require companies to report their comprehensive income in their primary financial statements. The Financial Accounting Standards Board (FASB) permits companies to present comprehensive income in three different ways: 1) in the income statement; 2) in a separate statement of comprehensive income; 3) in the stockholders' equity statement. This paper focuses on testing whether the new comprehensive income reporting formats affect users' judgement when valuing companies. The results indicate that alternative presentation formats do not influence users' processing of comprehensive income information. In other words, reporting comprehensive income in a separate statement or in the income statement does not add more relevant value than reporting it in the stockholders' equity section.