NET INCOME VERSUS COMPREHENSIVE INCOME: AN EMPIRICAL ANALYSIS OF VOLATILITY

The ongoing process to better demonstrate the finan c al position of the companies culminated in compulsory disclosure of the comprehensive incom e statement in the USA in 1997. Contrary to accounting theorists in some points, FA SB determined that certain financial changes were recorded in Equity, composing the Comp rehensive Income, to the detriment of recognition in the net income. This stance was just ified by the volatility that would cause certain variations in net income of companies. Give n the requirement of comprehensive income disclosure in Brazil from the year ended on December 31, 2010, this work analyzes hypothetical and empirically the volatility that Ot her Comprehensive Income would cause if they were registered in the net income. Descriptive statistics and T-Test were used: two combined samples for means to analyze 21 Brazilian companies that disclosed accounting information in NYSE, for the financial years from 2 003 to 2007. The results obtained by means of descriptive statistics show that the possible recognition of Other Compreh ensive Income in the net income would cause greater volati lity in net income of those companies, without trend set to increase or decrease it. The c onversion of the financial statements of overseas investments is the item that most collabor ates to this volatility. The result obtained by the T-test did not reject the null hypothesis, s howing no statistically significant difference between the variables Net Income volatility and Com prehensive Income volatility.