Measuring and reporting income in Europe

Goncharov, Igor and Hodgson, Allan (2011) Measuring and reporting income in Europe. Journal of International Accounting Research, 10 1: 27-59. doi:10.2308/jiar.2011.10.1.27

Author Goncharov, Igor
Hodgson, Allan
Title Measuring and reporting income in Europe
Journal name Journal of International Accounting Research   Check publisher's open access policy
ISSN 1542-6297
Publication date 2011-01-01
Sub-type Article (original research)
DOI 10.2308/jiar.2011.10.1.27
Volume 10
Issue 1
Start page 27
End page 59
Total pages 33
Place of publication Sarasota, FL, U.S.A.
Publisher American Accounting Association
Language eng
Formatted abstract
The IASB discussion paper, Preliminary Views on Financial Statement Presentation _IASB 2008_, asks whether income should be aggregated and reported as a single comprehensive income figure, and how comprehensive income components should be reallocated. We extend prior empirical evidence by researching 16 European countries and by an extensive examination of impact metrics that include information, measurement, prediction, and conditional conservatism issues. A European setting that comprises substantial variation in markets, accounting rules, and business culture would, ceteris paribus, support differential reporting of comprehensive income. Results, however, consistently support the retention of operating net income as a general decision-relevant metric, with other comprehensive income reported individually and delineated by its unrealized nature. We found no compelling evidence that it should be reallocated into net income by function. Further, reported aggregated comprehensive income reverses the conservative attributes of income and has policy implications for providers of debt capital in a European setting. Results are robust to several firmspecific controls, nonlinearities, the impact of reporting incentives, and for early IFRS adopters.
Keyword Comprehensive income
Income allocation by function
Income value relevance
Accounting conservatism
Q-Index Code C1
Q-Index Status Confirmed Code
Institutional Status UQ

Document type: Journal Article
Sub-type: Article (original research)
Collections: Official 2012 Collection
UQ Business School Publications
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Citation counts: Scopus Citation Count Cited 19 times in Scopus Article | Citations
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Created: Wed, 02 Mar 2011, 21:15:11 EST by Karen Morgan on behalf of UQ Business School