Reporting comprehensive income issues: empirical evidence from France, Germany and Italy

Abstract

In this paper we would like to investigate the issues related to the disclosure of comprehensive income in France, Germany and Italy.

After the presentation of the literature about the reporting choices of the US firms, this research discusses the ones of 600 listed companies, by analysing data collected from their 2009 and 2010 consolidated financial statements.

More in detail, this work aims to investigate the choice of the statement in which comprehensive income has been reported, the correlation between the statement chosen and the business size and the correlation between the format and the sign of other comprehensive income. Finally, it also investigates whether the difference between net income and comprehensive income is statistically significant.

With regard to the choice of the prospect, literature shows that in USA firms largely prefer the statement of changes in stockholders' equity, while in Europe,  where such prospect cannot be chosen, companies prefer to disclose comprehensive income in the separate statement of net income and comprehensive income, probably to guarantee the separation between traditional revenues (and costs) and other comprehensive income. With regard to the correlations, neither the business size nor the sign of other comprehensive income influence the choice of the prospect which comprehensive income has been reported in. Our final finding suggest that net income and comprehensive income are statistically different each other.