Is Other Comprehensive Income Reported in the Income Statement More Value Relevant?

This study examines whether changing the reporting location of OCI from the Statement of Changes in Equity (SSE) to a combined Income Statement or a separate Statement of Comprehensive Income (SCI), as required by Accounting Standard Update (ASU) 201105, has affected the value relevance of OCI. Using manually collected data, we find that the value relevance of OCI decreased for firms that changed the reporting location of OCI from SSE to SCI when compared to firms that did not change the reporting location. We also find that the market prices aggregate OCI only when it is reported in the SSE in both the pre ASU 2011-05 (1998-2006) and the adoption (2010-2012) periods. Our results are robust and generally consistent with Chambers et al. (2007) in that investors price OCI only when it is reported in the SSE. Given the recent regulatory efforts to increase the prominence of OCI, our findings should be of interest to accounting standard setters, researchers, and practitioners.