Labelling in financial reporting: An examination of “other comprehensive income” and non-professional investors' judgements
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Qu, Xin
Kummer, Tyge‐F
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Abstract
Other comprehensive income (OCI) is often confusing for financial statement users and the International Accounting Standards Board has proposed new labelling to improve its presentation. Using an experimental method, we find that OCI labelling influences non-professional investors' evaluation and judgements on financial performance. Non-professional investors place greater weight on OCI information presented with explicit labels when assessing both the current and future performance of a company. Our results indicate that improving the presentation of OCI information enhances their perceived relevance in investors' decision-making. The results have practical implications for standard setters and financial statement users.
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Accounting & Finance
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© 2024 The Authors. Accounting & Finance published by John Wiley & Sons Australia, Ltd on behalf of Accounting and Finance Association of Australia and New Zealand.
This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License, which permits use and distribution in any medium, provided the original work is properly cited, the use is non-commercial and no modifications or adaptations are made.
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Accounting, auditing and accountability
Banking, finance and investment
Applied economics
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Yao, DT; Qu, X; Kummer, T, Labelling in financial reporting: An examination of “other comprehensive income” and non-professional investors' judgements, Accounting & Finance, 2024