The Impact of Comprehensive Income Compared to Net Income on Share Prices of Egyptian Listed Companies

Abstract

This study aims to examine whether comprehensive income (CI)  is superior to net income (NI) in explaining changes in share price. The used sample comprises Forty four Egyptian listed companies during the period from 2017 to 2019. Limited studies have focused on the relevancy of reporting (CI)   in developing countries and Egypt is no exception. The descriptive analysis reveals that the majority of sampled companies are profitable during the study period. Additionally, the mean of CI value (4.73), was relatively greater than that of NI (4.03), which suggests that CI is a major indicator of company performance. However, the findings indicate that NI is less variability compared to CI, since the latter includes some nonrecurring items. Furthermore, the regression analysis indicates that both comprehensive income and net income have a positive significant relationship with the share prices of Egyptian listed companies. But, CI has a higher power to explain variations in share price than NI. Anyhow, the author believes that disclosing both NI and CI is really beneficial, since they are complementary to each other.

Keywords: Comprehensive income, Value relevance, Share price, Net income, Egyptian listed companies

DOI: 10.7176/RJFA/12-8-09

Publication date: April 30^th 2021