ABSTRACT
The purpose of this research is to acquire empirical evidence of the benefit of PSAK No. 1 (2009) implementation by testing whether the properties of total comprehensive income are better than those of net income. Four properties of net income and of total comprehensive income were compared. This research also investigated whether the value relevance of total comprehensive income depends on location where the users can obtain this information.
Stock return was measured with average daily stock returns over the fiscal year subtracted with market return. A dummy variable was applied to determine companies that report Other Comprehensive Income (OCI) in their equity statement or in their comprehensive income statement. For companies with OCI, the dummy variable was used to determine the period before and after the implementation of PSAK No. 1 (2009). It represents a place where the users can obtain information about total comprehensive income. This study used a sample of 122 manufacturing firms listed in the Indonesian Stock Exchange from 2008 to 2014. The analytical tool used to test all hypotheses was ordinary least square.
The result of this research demonstrates that net income is more persistence, less variable, and more have predictive ability than total comprehensive income, yet total comprehensive income has more value relevance than net income. In addition, this research reveals that location of OCI is insignificant for the value relevance of total comprehensive income.
