Value Relevance of Profit or Loss and Comprehensive Income in the Slovak Republic

Andrejcik, Dušan (2017). Value Relevance of Profit or Loss and Comprehensive Income in the Slovak Republic. MRes thesis The Open University.



This study investigates the relative and incremental value relevance of profit or loss (PL), other comprehensive income (OCI) and its components and comprehensive income (Cl) in the Slovak Republic. We extend prior empirical evidence on Cl value relevance by examining one of the recently transitioned markets of Central and Eastern Europe that has extensively adopted the International Financial Reporting Standards (IFRS). Previous empirical studies provide mixed results, which can be attributed partially to the use of as-if estimation technique to approximate CI/OCI figures. For that reason, this study adopts a comparative design in which we compare the value relevance between the companies following IFRS and companies following local accounting regulations on a sample of public Slovakian listed entities in the period from 2012 to 2014. We find evidence that PL is more value-relevant than Cl in both groups, and that OCI provides value-relevant information, in addition to those already disclosed in PL and book value, only in the group of companies following Slovakian accounting regulations. Therefore, the results of this study suggest that mandating all Slovakian public listed entities to report comprehensive income does not enhance the usefulness of financial statements.

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