2007 Fiscal Year Final Research Report Summary
A Study on Reporting Financial Performance
| Project/Area Number |
18530359
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| Research Category |
Grant-in-Aid for Scientific Research (C)
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| Allocation Type | Single-year Grants |
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| Section | 一般 |
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| Research Field |
Accounting
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| Research Institution | Hosei University |
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Principal Investigator |
YAEKURA Takashi Hosei University, aculty of Business Administration, Professor (90308560)
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| Project Period (FY) |
2006 – 2007
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| Keywords | Reporting Financial Performance / Comprehensive Income / Net Income |
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| Research Abstract |
The purpose of this study is to perform comparison of the net income and comprehensive income as a performance measure from a viewpoint of a predictive value. This study focuses on comprehensive income that the IASB and FASB are going to introduce through their'Reporting Financial Performance Project,'net income, and their difference that is often called'Other Comprehensive Income.'This study compares these two income numbers from the perspective that aims at estimating firms' intrinsic values.
In performing simulations, I used the predictive ability of each performance measure as the measure of the usefulness. In order to compare the predictive ability of net income and comprehensive income, the future cash flow of the company was generated at random, and I compared the prediction ability of net income and comprehensive income calculated from there. Next, in order to compare net income, comprehensive income, and the pseudo net income that does not include recycle, financial assets were introduced into the above-mentioned model, and it was verified whether the usefulness of predictive ability would be influenced by the existence of recycling.
The result showed that it was the easiest to predict net income about future performance prediction. This result means that the usefulness of net income is higher than others for an investor. That is, it became obvious from a viewpoint of investment decision-making usefulness to abolish net income which International Accounting Standards Board asserts, and to display comprehensive income(and false net income) is unjustifiable.
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