Comprehensive Income: How Is It Being Reported And What Are Its Effects?

Abstract

SFAS No. 130 allows three format choices for reporting comprehensive income (CI); two involve reporting CI in a performance-based financial statement, while the third option incorporates it into a statement of changes in stockholders' equity (SCSE). Prior research suggests that reporting CI in the latter option results in less useful information for investors. This study examines CI reporting for a sample of financial service firms and demonstrates that a majority (63%) of them chose a SCSE format. In addition, a significant association existed between both the direction and size of the components of other comprehensive income and the format chosen.