Comprehensive Income and Social Cost Reporting as a Measure of Firms’ Profitability and Corporate Image

Abstract

In this study, the researchers try to investigate the relative ability of comprehensive income reporting and that of reporting a firms externalities as social cost in the final accounts affect the profitability and the corporate image of a firm. The study was conducted with ten selected companies registered with the Nigerian stock exchange for a period of twenty two years based on their annual financial reports and a questionnaire to gather inter-personal information on the issues raised. This study was informed by the fact that the FASB, in 2011 provided new guide lines on the implementation of the comprehensive income financial statements due to complains by stockholders on high cost of implementation and corporate reputation. In addition the researchers felt that if FASB find it necessary to introduce the comprehensive income accounting concept, then it was also necessary to look at comprehensive expense concept to include externalities cost as a write off cost to comprehensive income to determine the net income of a firm. The data collected was analysed with econometric view (E-view) system after presenting data with Microsoft excel 2007 model. The results revealed that comprehensive income reporting affects the profitability of a firm if measured with the reporting of the externalities and corporate image will improve substantially if firms follow such reports on a regular basis. The researchers recommended that firms should consistently present such reports in the annual financial statements.

Keywords: Comprehensive income, Social cost, Measure, Firm, Profitability and Corporate image