Does the reporting location of other comprehensive income matter? The investor's perspective

In the context of changes mandated by the Chinese Ministry of Finance in January 2009 regarding the location in which other comprehensive income (OCI) is reported, this paper finds that reporting OCI on the performance statement significantly improves its value relevance. The improvement is driven by two OCI items: unrealised holding gains/losses on available-for-sale securities and the share of other comprehensive income of investees under the equity method. Our results show that the OCI reporting location matters, which supports the psychological perspective that investors pay more attention to salient information. Our findings lend strong support to the approach of standard setters in reporting OCI on the performance statement.