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Student
Title
Supervisor
Faculty
Educational Programme
Final Grade
Year of Graduation
Alexander Dmitriev
Usefulness of "Other Comprehensive Income" for Investment Decisions: Russian and Foreign Practice
Corporate Finance
(Master’s programme)
7
2019
In 2011, the IASB (International Accounting Standards Board) changed

IAS 1 (International Accounting Standard) called «Presentation of Financial Statements». From this moment, companies under IFRS standards obligated to reflect Other Comprehensive Income (OCI) in the Comprehensive Income report. Right after this changes IASB published a discussion staff paper in order to highlight significant role of OCI under IFRS. It was stated that OCI is designed to improve the forecast value of Comprehensive Income statement when company value estimated by investors. On top of this OCI was intended to make the reporting more clear and transparent for investors. The paper reflected IASB positive opinion about usefulness and value relevance of OCI. However, the changes in IAS 1 was followed be extensive debates within professional accountants and researches. During the debates, one side advocated the needs to reflect OCI as part of comprehensive income statement, while the other pointed out the complexity and overall low informational content of the OCI.

Existing researches of OCI usefulness showed mixed results. Evidence of OCI value relevance and usefulness was obtained using data from US and South-Korean markets and no signs of OCI value relevance were found in Italy and Germany. What concerned Russian market - there was no significant studies of OCI on Russian market as of 2019.

This paper analyzes the features and difficulties of reflecting OCI under IFRS as well as examines its usefulness, based on the latest available data from the US market for the period from 2015 to 2018. Additionally this study focused on examples from Russian marker to show significance and usefulness of OCI.

The analysis showed that OCI has additional usefulness as compared with operating income and can explain the profitability of company’s shares (using sample from US market). Manipulations with OCI as well as significant volume of OCI and its dependency on local currency fluctuations was shown using sample from Russian market.

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