This exploratory study is motivated by the continuing debate on the pre-eminence of the clean surplus relation (CSR) comprehensive accounting information over the firm earnings reported under the notion of dirty surplus relation (DSR). The level of informativeness of the accounting earnings reported in the income statement (based on DSR convention) of listed firms in Malaysia and the all-inclusive comprehensive income extrapolated from the same annual reports is analysed. The value relevance tests on the income performance metrics established from these two distinctive accounting conventions are conducted using 323 (317) sample firms with continuous market and accounting data of 15 (14) years reveal that stock prices are more responsive to accounting earnings measured on DSR income concept as compared to the CSR counterpart. These findings imply that comprehensive accounting information established under the notion of clean surplus relation is not as effective in conveying value-relevant information to stakeholders.
Keywords: Value Relevance, accounting metrics, clean surplus relation, comprehensive income, dirty surplus relation, informativeness
