We examine incremental information content of disaggregation of other comprehensive income (OCI). OCI has been reported in the income statement under IFRS since 1 July 2012 amid a debate about whether all OCI items should be reclassified into income or all not reclassified into income in subsequent periods. Our contribution to this literature is to investigate the disaggregated realised and unrealised components and their predictive ability. The results suggest that the disaggregated components of cash flow hedge, available for sale, and foreign currency reserve gains and losses all have differential predictive ability. These gains and losses do have predictive ability for firm operating performance measured by operating income and cash flow from operating activities. Additionally, asset revaluation gains and losses were found to be significantly positively associated with future firm performance, there was no significant association between defined benefit gains and losses and future firm performance. The inferences are robust to a number of sensitivity analysis and included controls firm size, leverage, market-to-book ratio, dividends, sales growth, year, industry, GDP growth, loss, and post-2013.

41st Annual European Accounting Association Congress; Milan, Italy; 2018-05-30 - 2018-06-01