Income Measures -Analysts' use income measures and the consistency with IAS 1 Presentation of Financial Statements

Sammanfattning: Background and background to the problem: The IASB and FASB started a joint project in April 2004 on financial statement presentation with the goal of further developing convergence of international standards. Proposed amendments to IAS 1 resulted in a revision of the standard in September 2007, which came into force in January 2009. The new presentation requires all owner changes in equity to be separated from non-owner changes, and a statement of comprehensive income was introduced due to the revision. Most research regarding comprehensive income concludes that it is not considered superior compared to other measures, with a few exceptions. Furthermore, previous research also discusses that comprehensive income might contribute useful information for the users of financial statements. Purpose: The purpose of this thesis is twofold: first to come to an understanding of which income measures analysts use and if this is consistent with IAS 1; second to assess whether the IASB's view on what is needed to achieve enhanced usefulness of the financial statements is in line with what analysts use and demand. Limitations: This thesis focuses on analyst reports concerning firms listed on the Stockholm Stock Exchange, which follows the IFRS, since it is relevant for the thesis to study information about firms who produce their financial statements according to IAS 1. Furthermore, the periods these analyst reports concern are 2006-2007 and 2010-2011. Method: This study employs both qualitative and quantitative approaches. The main part of the empirical investigation is performed through an investigation of analyst reports. Furthermore, the study of analyst reports is supplemented by qualitative interviews with analysts. Results and conclusions: The investigation of analyst reports provided evidence that analysts hardly use CI at all when creating their forecasts, and the fact that most of the respondents do not use CI in a great extent, it may indicate that the IASB's motivation regarding the revision of IAS 1 do not correlate with analysts' demands.