Net income, other comprehensive income & total comprehensive income on firm valuation in the Philippines

• Main Authors: Tubay, Jerwin B., Bendo, Mark Vincent B.
• Format: text
• Published: Animo Repository 2018
• Subjects: Business enterprises—Valuation—Philippines; Corporate profits—Philippines; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/faculty_research/9264
• Institution: De La Salle University

IAS 1, Presentation of Financial Statements, requires the presentation of comprehensive income on the face of the financial statements. The requirement made the statement of income to be more useful by presenting the total comprehensive income - the sum of net income and changes in other comprehensive income. This now provides dilemma to users of financial statements in which income item to be used in their analysis. This paper aimed to determine whether the net income, other comprehensive income and total comprehensive income (independent variables) significantly affect firm value (dependent variable) among 44 publicly-listed industrial companies for the periods 2014-2016. The data about firm value were extracted from the Global Security Prices in Compustat database while the income figures were from the firm’s respective financial statements from Philippine Stock Exchange. Fixed-effect panel data regression was used to observe the behavior of the variables. The results showed that none of the income figures were significantly related to the firm value. The result for other comprehensive income and total comprehensive income is consistent with previous literature while for net income, it is in contrary with literature telling that net income is directly associated in the determination of firm value. However, other literature about firm value concluded that there are other factors that drive firm value and such literature support the result of this study.