Beyond Net Income: The Incremental Value Relevance, Predictability, and Performance Implications of Total Comprehensive Income — Evidence from the Palestine Exchange
DOI:
https://doi.org/10.51325/fj8g1130Abstract
The current research focuses on the value relevance and predictive power of net income (NI), other comprehensive income (OCI), and total comprehensive income (TCI) in PEX-listed firms from 2020 to 2025. More specifically, it attempts to determine whether OCI offers any additional information to NI in explaining the firm market value, whether NI and OCI help predict future earnings and operating cash flows, and whether the value relevance of OCI varies across different sectors, especially financial versus non-financial. This is done via applying panel data regression models, which include price-level model, return model, and predictive models, with the inclusion of control variables at the firm level, sector fixed effects, and year fixed effects. It is discovered that NI and TCI have a positive relationship with the market value, and OCI provides additional significant information beyond NI and book value. Net Income proves to be the most accurate predictor of future earnings, while OCI does not demonstrate any significant predictive power for future operating cash flows. Moreover, the value relevance of OCI is much more evident in the case of companies within the financial sector because of their increased susceptibility to fair-value accounting. This research provides evidence supporting the usefulness of comprehensive income in making decisions and highlights the value relevance of OCI, which adds up to other traditional measures of performance. This paper contributes to the existing literature through its recent data on the Palestine Exchange.
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Copyright (c) 2026 Ammar Zakaria Salem, Bahaa Subhi Awwad, Areej Awwad, Mohammad N. Qadadha (Author)
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