The relative ability of net in-come, comprehensive income and its components in predicting future cash flows, net income and comprehensive income an empirical comparative : study on firms iisted in the Egyptian stock exchange

الملخص EN

This study aims to examine the relative ability of net income, comprehensive income and its components in predicting cash flows, net income and comprehensive income for future periods.

In addition, it examines the predictive ability of the individual components of other comprehensive income over and above net income versus other comprehensive income in aggregate to predict cash flows, net income and comprehensive income for future periods.

The study is conducted on those companies listed in the Egyptian stock market in compliance with the Egyptian Accounting Standard No.1 “Presentation of Financial Statements” issued in 2015 that made the preparation of a separate statement on comprehensive income mandatory starting from the fiscal year 2016.

Actual reported data obtained from the quarterly financial statements issued by listed firms for the years 2016 and 2017 were used resulting in 400 quarter observations for all sectors of the economy except banks and insurance companies.

Data were analyzed using multiple regression analysis where the adjusted R² was used to compare the predictive power of each of two corresponding models.

Results did not provide conclusive evidence for the superiority of comprehensive income over net income in predicting cash flows, net income and comprehensive income for one future period as the predictive ability of both of them was approximately the same.

Results also indicated that the individual components of other comprehensive did not help in improving the predictive power of firms' future performance compared to the aggregate figure of other comprehensive income taken as a whole.

Both measures of other comprehensive income whether detailed or aggregate provided approximately the same predictive power with respect to cash flows, net income and comprehensive income for one future period.