기타포괄손익과 재무분석가의 이익예측오차 사이의 관련성에 관한 연구 = The Association between Other Comprehensive Income and Error in Analyst`s Earnings Forecast

다국어 초록 (Multilingual Abstract)

Comprehensive income (CI) includes all the changes of the values of equities except for the transactions with shareholders in its concept of income. The comprehensive income is composed of net income (NI) and other comprehensive income (OCI). Since the announcement of SFAS No. 130, the Financial Accounting Standards Board of the US has required firms to disclose the information on CI as an adjustment of NI or as a separate statement. The International Accounting Standards Board and Korean Accounting Standards Board also are preparing for the change from traditional income statement to comprehensive income statement. This study examines whether current OCI is associated with errors in analysts` earnings forecasts for future periods. Prior studies on CI have mostly focused on the value relevance of CI to provide evidence of the usefulness of CI. This study is different from prior studies in that this study examines the analysts` forecasts to approach the usefulness of CI in view of the financial analysts, not from the investors in the capital markets. This study uses a maximum of 1,023 firm year observations of the firms listed in the Korean Stock Exchange from the years2000 to 2005. The data on analysts` earnings forecasts are collected from Fn-DataGudiePro database. Other firm-specific financial data are collected from KIS-Value II database. The analysts` forecasts data are collected twice per year: at the end of June and December for December fiscal-year-end firms. Empirical results suggest that OCI is significantly associated with the errors in analysts` earnings forecasts. In other respects it implies that OCI can help analysts and investors to correct the errors in the forecasts. Especially, both signed errors and absolute errors increase as OCI increases. Further tests reveal that the above mentioned association is mostly driven by the sub-samples for which OCI is smaller than zero. As the negative amount of OCI increases (becomes further negative), analysts` earnings forecasts become more optimistically biased and the absolute magnitude of the errors increases. Further analyses reveal that all the results documented above are driven by the available-for-sale securities holding gains/losses. These findings suggest that analysts have difficulty in correctly interpreting the implications of negative OCI and how they are related to future earnings. Currently, Korea is evaluating the introduction of extended income statement based on CI. The findings of this study support the arguments concerningthe further detailed disclosure on the CI. CI can be useful to improve the accuracy of analysts` forecasts and investors can also use the information in order to judge the magnitude of the potential error included in the analysts` forecasts. In this respect, this study has important policy implications.

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