Abstract

This paper examines whether the International Financial Reporting Standards (IFRS)’ comprehensive income is
related with the future performance of the firms listed on the Tokyo Stock Exchange (TSE) First Section. We
find that in Japan, comprehensive income is not superior to other earnings or cash flow variables in predicting
future equity returns of the TSE First Section firms. Instead, the ordinary profit to total asset ratio and the
earnings before interest and tax to total asset ratio demonstrate the stronger predictive power for the future firm
performance.

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