Net Income vs. Comprehensive Income -A Reexamination of Attributes, Relevance, and Price Informativeness-

Abstract

The purpose of this paper is to compare the usefulness between net income and comprehensive income.
The results by SUR (seemingly unrelated regression) show the following evidence. Although net income is more persistent than comprehensive income in one year, the persistence of comprehensive income is higher than net income in another year. We cannot support the claim that one is always more persistent than another. Consistent with prior expectation, comprehensive income is more timely than net income.
However, we cannot meaningfully test the effect of conservatism on both income. The value relevance and price informativeness of net income is not significantly different from those of comprehensive income.
We cannot find the strong evidence, which support the insistence that one is superior to another. These empirical results will make a important contribution to the setting of accounting standard for performance reporting.