Business, Management and Accounting
8 years ago

Net income remains superior to comprehensive income for firm performance.

Journal of Accounting and Economics
Is comprehensive income superior to net income as a measure of firm performance?
Dan S. Dhaliwal, K.R. Subramanyam, Robert Trezevant

Paper Summary

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Comprehensive income is not necessarily better than net income for measuring how well a company is doing, except for financial firms. The only part of comprehensive income that seems to help is the adjustment for marketable securities. This means that for most companies, net income is just as good as comprehensive income for showing how well they are performing. The results also suggest that the current rules for what goes into comprehensive income might need to be looked at more closely.