Other Comprehensive Income (OCI) Influenced by the Covid-19 Pandemic – Illustrated with the Example of Entities Listed on the Warsaw Stock Exchange (GPW)
Abstract: The Covid-19 pandemic is undoubtedly this event that has had the strongest impact on the economic activity of companies in the last two years and was reflected in their financial statements. The aim of the study is to verify whether the effects of the Covid-19 pandemic are visible in the area of other comprehensive income presented in the statement of comprehensive income. The study fits into a wider trend of researches concerning financial information presented in this element of a financial statement but in connection with the current subject of the Covid-19 pandemic. The study presents the results of the research on OCI value in the statements of comprehensive income of 91 largest entities listed on the Warsaw Stock Exchange. The comparative analysis covered data from the pandemic period (2020-2021) and the year before it (2019).
<a href="https://dx.doi.org/10.15611/fins.2022.1.03">DOI: 10.15611/fins.2022.1.03</a>
<p>JEL Classification: M41, M48</p>
<p>Keywords: other comprehensive income (OCI),financial statement, IFRS, pandemic, Covid-19</p>
<h2>1. Introduction </h2>
<p>The appearance of a new type of coronavirus called SARS-CoV-2 at the
end of 2019, its very dynamic spread that followed, and the announcement
of a global pandemic by the World Health Organisation as early as in
March 2020 are undoubtedly the events that have influenced the global
economy in the last two years most significantly. The global lockdown,
which lasted for some moths, by causing lower demand, breaking supply
chains and considerable limitations in employees’ availability has
influenced the economic activity of enterprises and was reflected in
their financial statements in an unprecedented way. Apart from the
obvious decrease in income, numerous entities were forced to face a
revaluation of elements of their assets and liabilities, recognise
resulting differences, take into account reserves for contracts with
delay damages and to verify the compliance with the rule of continuing
activity influencing the method of presenting information in a financial
statement.</p>
<p>The aim of the study was to verify whether the effects of the
Covid-19 pandemic are visible in the area of other comprehensive income
constituting an element of comprehensive income statement drawn up by
entities using the International Financial Reporting Standards and based
in Poland. The study fits into a wider trend of studies concerning
financial information presented in this element of a financial statement
but in connection with the Covid-19 pandemic.</p>
<p>To achieve this aim, empirical research was conducted in which
information included in statements of comprehensive income of 91
entities listed on the Warsaw Stock Exchange and included in its main
indices, i.e. the WIG20, mWIG40 and sWIG80, was analysed. The study
covered the years 2019-2022, namely the two years of the Covid-19
pandemic (2020 and 2021) and the year directly before it (2019). In the
quantitative analysis of the data the methods of descriptive statistics
and significance tests were used. In the interpretation of the obtained
results, the results of earlier studies conducted in this area were
taken into consideration. This study consists of two parts. The first
presents the most important theoretical aspects concerning OCI and
empirical research conducted in this area. In the second part, the
results of the conducted empirical research are described.</p>
<h2>2. Other
comprehensive income – theoretical aspects </h2>
<p>Other Comprehensive Income (OCI) constitutes the other significant
part of the statement of comprehensive income. It was introduced into
the solutions of the International Financial Reporting Standards in 2008
as a result of changing IAS 1 allowing establishing a new level of
income, i.e. Comprehensive Income (CI) (Prewysz-Kwinto, 2020a, p. 510).
The new report is the result of a long-running discussion concerning the
place of presentation of equity changes, which, however, does not
concern transactions with shareholders, but result from the changes of
value of elements of assets and liabilities valued in fair value that
occurred when their value is recalculated at the balance sheet date.<a href="#fn1">1</a> Those changes are defined as OCI. In
the new report, they alter the net result of an entity, which is the
effect of actual transactions, with the results of the valuation of the
elements of assets and liabilities resulting from the accepted
accounting policy (Rówińska, 2019, p. 213). Therefore, the statement of
comprehensive income combines an evaluation in historical cost, included
in the net result, with the results of the more and more widely used
evaluation in fair value included in other comprehensive income
(Bek-Gaik, 2013, p. 21). Although OCI reflects an evaluation of still
unexecuted transactions – and therefore only possible to achieve
financial effects established according to actual values at the balance
sheet date – it is emphasised in the literature that comprehensive
income, when they are included, better manifests the abilities of an
entity to generate profits in the future (Kanagaretman, Mathieu and
Shehata, 2009, p. 352), and also measures the value creation process
better and allows forecasting the ability of a company to generate cash
and its equivalents (Marchini, & D’Este, 2015, p. 1725).</p>
<p>Buk defines OCI as revenue and expenses (including reclassification
adjustments) which were not included in the result (as gains or losses)
as required or permitted by other IAS/IFRSs, including among others IAS
16 and 38 regarding the evaluation of property, plant and equipment and
intangible assets, IAS 19 regarding the results of evaluation of
specific employee benefits, IAS 21 regarding the results of the
translation of financial statements of entities operating abroad, or
IFRS 9 regarding the evaluation of financial instruments (debt and
equity) and cash flow hedges (Buk, 2013, p. 63). Other comprehensive
income involves therefore those results over which the entity's
management has little control and whose value depends mainly on external
conditions that affect its operation.</p>
<p>Since it was introduced, the statement of other comprehensive income
has remained the object of extensive empirical research. It focuses on
the one hand on the way of presenting information in this element of a
financial report, since IAS 1 provides a considerable amount of freedom
in this respect, and on the other, on the usefulness of the information
concerning comprehensive income and other comprehensive income for
decisions made by investors and the evaluation of the financial
situation of an entity. In Europe, empirical research was conducted by,
among others: Ferraro (2011), Agostini and Marcon (2013), and Cristofaro
and Falzago (2014), who studied entities listed on the Stock Exchange in
Milan, Cimini (2013), who studied entities listed on the Stock Exchanges
in France, Germany and Italy, Jianu, Jianu, and Gusatu (2012), who
analysed reports of entities listed on the London Stock Exchange, and
Backhuijs, Camfferman, and Oudshoorn (2017), who analysed companies
listed on the Amsterdam Stock Exchange, Obradovic and Karapavlovic
(2017), who analysed financial reports of entities in Serbia, Gazzola
and Amelio (2014), who analysed data for companies listed on the Prague
Stock Exchange, Būmane (2018), who analysed entities on the Stock
Exchange in Riga, Lapkova and Stasova (2014), who analysed reports of
companies preparing financial reports according to IFRS in Slovakia, and
finally Ozcan (2015), who included entities listed on the Istambul Stock
Exchange in his research.</p>
<p>In Poland, this issue was addressed by, among others, Szychta,
Walińska, Bek-Gaik, Sajnóg, Gad, Piosik, and Prewysz-Kwinto, who
analysed data included in the financial reports prepared by companies
listed on the Warsaw Stock Exchange (Prewysz-Kwinto, 2020b, p. 71). The
presented conclusions, indicated first of all, a considerable difficulty
in comparing information concerning OCI between companies due to the
considerable freedom of its presentation in a financial statement
allowed by IAS 1. A notable variability over time of the value of OCI
was emphasised, as was these companies considerably greater diversity in
relation to the net profit, which, translating into comprehensive
income, can weaken or even limit the possibility of its use by
stakeholders to make the right economic decisions. Yet, a larger
variability and diversity result from the change in the external
conditions reflected in the fair value of the elements of assets and
liabilities at the balance sheet date.</p>
<p>One such important change influencing recently the activities of
economic entities, and primarily their results reported in statements of
comprehensive income, has been the Covid-19 pandemic. Another question
whether, and if yes, how, the pandemic has influenced the value of OCI
reflected in comprehensive income has arisen. A study aimed at answering
the questions and also continuing the trend of research concerning this
element of financial reporting was conducted. The results are presented
later in this study. Attention should be drawn to the fact that no study
concerning OCI at the time of the pandemic has been conducted in our
country or abroad. Due to the fact that, as indicated above, the value
of OCI depends mainly on external factors, this study is important for
assessing the impact of the Covid-19 pandemic on the financial position
and performance of an entity. Thus, it is part of the research on the
statement of comprehensive income, which concerns the usefulness of the
information it contains.</p>
<h2>3. The
study methodology and the characteristics of the studied group </h2>
<p>The study covered the 140 biggest capital groups listed on the GPW in
Warsaw which on 15 January 2022 comprised its main indices, i.e. the
WIG20, mWIG40 and sWIG80. The selection of the entities was not random
but deliberate. An entity from the above mentioned indices could be
included in the studied group only when four of the following conditions
were met:</p>
<ul><li><p>in accordance with Regulation No 1606/2002 of the European
Parliament and of the Council<a href="#fn2">2</a> and article 45 of the
Accounting act, an entity prepared a financial statement in accordance
with the International Financial Reporting Standards throughout the
studied period, i.e. in the years 2021-2019 (2021 and 2020 – two years
of the Covid-19 pandemic and 2019 – the year before it
started);</p></li>
<li><p>an entity recorded other comprehensive income in all the studied
years;</p></li>
<li><p>for reasons of consistency of the compared data, only the
entities whose financial year finished on 31 December were included in
the study;</p></li>
<li><p>for reasons of consistency of the compared data (mainly due to
different limitations related to the pandemic in individual countries),
the study included only the entities based in Poland which prepared
financial statements in Polish currency; therefore, those with their
head offices abroad (mainly from Ukraine) were excluded.</p></li>
</ul>
<p>After all the above criteria were taken into account, the obtained
group consisted of 91 entities, 20 from the WIG20 (the biggest
entities), 28 from mWIG40 (medium-sized units) and 43 from sWIG80 (small
entities). If the studied entity created a capital group, the analysis
concerned data from consolidated statements, in other cases data from
individual statements were taken into account.</p>
<p>The entities included in the study represented different sectors
presented in detail in Table 1.</p>
<p>In the studied group, entities from the financial sector (mainly
banks), also those from construction and Information Technology sectors,
constituted the largest share. The other group included among others
units from the furniture, paper, food, tourism, and telecommunications
industries, and also those manufacturing medical equipment.</p>
<p><strong>Table 1</strong>. Sector-specific characteristics of the
studied group</p>
<p>
<img src="/articles/2022/Prewysz-Kwinto/media/image1.png" />
</p>
<p>Source: own study.</p>
<p>The aim of the study was to identify similarities or differences in
the level of other comprehensive income in the period of the Covid-19
pandemic (in 2021 and 2020) and before it started (2019). In the
quantitative analysis, techniques of descriptive statistics and
statistical tests of significance were used, and the achieved results
were compared (if possible) with those from the earlier studies in this
area. Due to the deliberate selection of the study sample and limiting
the study only to capital groups included in the WIG20, mWIG40 and
sWIG80 and preparing statements in accordance with IFRS, the results
obtained and presented in the study are not representative for the whole
population understood to mean all the entities listed on the Warsaw
Stock Exchange.</p>
<h2>4. The results of the study</h2>
<p>The assessment of the formation of other comprehensive income started
with comparing the kind of result (positive or negative) generated by
the studied entities in the three examined years. The aim was to assess
the parameter during the Covid-19 pandemic and before it. The number and
share of the entities with positive and negative OCI in individual
years, for the whole group and in terms of the size of the entities
included in it, are presented in Table 2.</p>
<p><strong>Table 2</strong>. The number (N) and share (in %) of entities
with a positive and negative level of other comprehensive income in
2021-2019</p>
<p>
<img src="/articles/2022/Prewysz-Kwinto/media/image2.png" />
</p>
<p>The percentage was calculated for the number of studied entities from
a given stock index – for WIG20 it amounted to 20, for mWIG40 – 28, and
for sWIG80 – 43</p>
<p>Source: own study.</p>
<p>When starting to analyse the data presented in Table 2, it should be
indicated that in the two years of the Covid-19 pandemic the proportion
of entities recording a positive value of OCI was a little higher than
in the year before the pandemic. In its first year it amounted to 58.2%,
in the following year it increased to 60.4%, and in the year before the
pandemic to just 46.2%. Therefore, the presented results show that
during the pandemic, over half of the studied entities recorded a
positive value of OCI increasing the value of the comprehensive income
in relation to the net profit, while in the year preceding the pandemic
those with a negative value prevailed. An increased number of entities
recording positive OCI during the pandemic was seen for all the separate
groups, i.e. for big entities (WIG20), medium-sized ones (mWIG40), and
small ones (sWIG80), though in the second year the share was bigger than
in the first year for the big and small groups. The opposite situation
can be seen in the case of the medium-sized groups, in which the share
of entities recording positive OCI in the second year was slightly lower
than in the first one.</p>
<p>It should be added that such changes were not seen in the case of the
net profit. Firstly, the percentage of entities recording a positive
value of the net profit was significantly higher and exceeded 75% during
the whole period of the pandemic. Moreover, in its second year and in
the year before it, the share of entities generating the net profit was
identical at 85%. However, in the first year of the pandemic, it was
lower – 76%. This indicates that in the first year of the pandemic, the
number of entities recording a net loss increased, but in the second
year the situation was identical to that before the pandemic.</p>
<p>Since the number of entities recording a positive value of OCI during
the pandemic was slightly higher than of those with a negative value, it
was established in the analysis how many entities lowered their value.
In the analysis, the results from the first and second years of the
pandemic were compared separately with the results achieved in the year
before the pandemic, and also a combined analysis aiming at establishing
how many entities in the two years of the pandemic recorded lower and
how many higher OCI than before the pandemic was conducted. The results
are presented in Table 3.</p>
<p><strong>Table 3</strong>. The number (N) and share (in %) of entities
recording lower/higher profits during the pandemic (in 2021 and 2020)
than in the year before the pandemic (2019).</p>
<p>
<img src="/articles/2022/Prewysz-Kwinto/media/image3.png" />
</p>
<p>The percentage was calculated for the number of studied entities from
a given stock index – for WIG20 it amounted to 20, for mWIG40 – 28, and
for sWIG80 – 43</p>
<p>Source: own study.</p>
<p>When analysing the data presented in Table 3, it should be noted that
in both years of the pandemic the share of entities recording smaller
values of OCI than before the pandemic was similar, at around 40%. In
the case of the medium-sized and small units, the share was identical
and for the big ones higher in the second year of the pandemic.
Attention should be drawn to the fact that the number of entities which
in both years of the pandemic recorded smaller values of OCI than in the
year before it was considerably smaller; such entities accounted for
just 17% of the whole studied group. The number of units that in both
years of the pandemic recorded better results than before it, was twice
as high and represented 38.5% of the total. However, almost half of the
studied units (44.9%) recorded higher OCI in the one year of the
pandemic and lower in the other year than in the year before it. This
raises the question of whether the values of other comprehensive income
and the changes differed not only in relation to the period before the
pandemic but also during it.</p>
<p>The methods of descriptive statistics were used in answering the
question. For the whole studied group, and separately for the big,
medium-sized and small entities, mean value (<span>\(\overline{X}\)</span>) and standard deviation (s)
of other comprehensive income were calculated. The achieved results are
presented in Table 4.</p>
<p><strong>Table 4</strong>. Mean value (<span>\(\overline{X}\)</span>), standard deviation (s) (in
PLN million) and asymmetry coefficient of other comprehensive income in
2022-2019</p>
<p>
<img src="/articles/2022/Prewysz-Kwinto/media/image4.png" />
</p>
<p>Source: own study.</p>
<p>The data presented in Table 4 indicate that in the first year of the
pandemic the mean value of other comprehensive income, calculated for
all the studied entities and separately with regard to their size and
belonging to a specific stock index, was several times bigger than in
the year before the pandemic, and at the same time was characterised by
a much bigger diversity (a higher standard deviation). Taking the whole
studied group into consideration, the mean value of OCI increased from
PLN 16.4 million in 2019 to PLN 77.7 million in 2020, that is by 375%,
which indicates that other comprehensive income influenced comprehensive
income more during the pandemic than in the year before it.</p>
<p>In the second year of the pandemic the situation changed in relation
to the previous years. The mean value of OCI was significantly negative
when analysing both the whole studied group and the data with regard to
the size of an entity. For the whole studied group, the mean value of
OCI amounted to PLN -321.7 million, and for the biggest units included
in WIG20 to as much as PLN -0.86 billion. As far as the absolute value
is concerned, the mean value of OCI increased again several times in
relation to the first year of the pandemic, influencing comprehensive
income much more. Thus, the two-year period of the pandemic caused much
greater changes in the value of balance sheet items, the effects of
which are presented in the area of other comprehensive income, than in
the pre-pandemic period. Moreover, the analysis confirmed that the
pandemic did not change the OCI value equally in both years of its
duration.</p>
<p>In order to verify whether the mean values of other comprehensive
income presented in Table 4 differ in individual years statistically
significantly, additional tests of significance for dependent variables
were conducted (the same studied group, and evaluated parameters
concerned other periods).</p>
<p>When constructing the assumptions of the test of significance, the
H0 hypothesis was formulated and it proposed an equal mean
value of OCI (m1 = m2). The H1
hypothesis assumed that, in accordance with the values achieved earlier
and presented in Table 4, the mean was higher in 2020 than in 2019
(m1 > m2), and in 2021 lower than in 2019
(m1 < m2). Additionally, a test of significance
was also conducted for values in 2021 and 2020 in order to verify
whether those from the second year of the pandemic were statistically
significantly lower than those in the first year. In accordance with its
assumptions, the one-tailed Student’s t-test was used in the analysis.
The H1 hypothesis, the values of the Student’s t-test
statistic and the probability value allowing for rejecting H0
in favour of H1, are presented in Table 5. In accordance with
the general rules, it was assumed in the analysis that the differences
are statistically significant as the probability value is smaller than
0.05.</p>
<p><strong>Table 5</strong>. The H1 hypothesis with the
values of the Student’s t-test statistic and the probability value for
the studied groups (the grey colour indicates statistically significant
dependencies)</p>
<p>
<img src="/articles/2022/Prewysz-Kwinto/media/image5.png" />
</p>
<p>Symbols: t – values of the Student’s t-test, p – the probability
value allowing rejecting H0 in favour of H1, m –
mean value.</p>
<p>Source: own study.</p>
<p>The results presented in Table 5 show that the values of OCI in the
second year of the pandemic were statistically significantly lower than
in the year before the pandemic (2019) and in its first year (2020) for
both the whole studied group and the biggest entities included in the
WIG20, with the probability value of below 0.05. Such dependencies were
not indicated for the small and medium-sized groups, though it should be
noted that the probability value allowing to reject H0 in
favour of H1 was low, i.e. below 0.1. As far as comparing the
value of the OCI between 2020 and 2019, statistically significantly
higher values in the first year of the pandemic were indicated for the
whole group and for medium-sized units.</p>
<p>The significant differences in values of other comprehensive income
as well as the fact that in the first and second years of the pandemic
they manifested an opposite tendency prompted a more detailed analysis
and verification of which entries in the OCI reported in the financial
statements of the studied entities were of the highest importance in
this respect. In accordance with the rules of IAS 1 concerning the
presentation of the OCI, an analysis was conducted separately for those
being and those not being the subject of reclassification to profit and
loss.</p>
<p>Table 6 presents the main entries of the OCI recorded in the
financial statements of the studied units, their frequency, also the
calculated share of positive and negative income and the mean value in
the whole studied period.</p>
<p>At the beginning of the analysis of the results presented in Table 6,
it must be indicated that among OCI being the subject of
reclassification to profit and loss, the following entries were
indicated most frequently: <em>exchange rate differences from the
conversion of foreign units’ statements</em> – included in 66% of the
studied entities and <em>the effects of evaluation of cash flow
hedges</em> – 51.6%. Among OCI not being the subject of
reclassification, <em>actuarial gains and losses concerning employee
benefits</em> dominated – 63.7%. Other entries appeared much less
frequently. It should also be noted that the frequency of the reported
individual OCI did not change in the whole studied period, and almost
all entities reported identical entries in every year. This allows for
the conclusion that the Covid-19 pandemic did not contribute to the
presentation of a wider range of other comprehensive income than in the
year before it.</p>
<p><strong>Table 6</strong>. Main entries of other comprehensive income,
their frequency (in %), the share of positive and negative income (in %)
and mean value in 2021-2019 (in PLN million)</p>
<p>
<img src="/articles/2022/Prewysz-Kwinto/media/image6.png" />
</p>
<p>Source: own study.</p>
<p>When comparing the OCI as being and not being the subject of
reclassification, it must be stressed that the former were reported in
the whole studied period much more often ( in over 86% of financial
statements) than the latter (fewer
than 68%). Moreover, the absolute value of the average OCI being the
subject of reclassification was also higher in the whole period, which
indicates that those entries were of much higher significance in the
formation of comprehensive income. The above confirms that the Covid-19
pandemic did not change the structure and scope of the presented
information according to the principles required by IAS 1. It should
also be pointed out that in the whole studied period, the mean values of
OCI as being and not being the subject of reclassification were of
opposite values, i.e. when the OCI mean value of the former was
positive, it had a negative value for the latter and vice-versa.</p>
<p>When comparing OCI as being the subject of reclassification in the
first year of the pandemic with the year before it, it must be pointed
out that the number of positive results increased for all the entries
except the one concerning <em>the effects of hedging instruments</em>
(in 2019, 91.7% of the entities reported a positive value, and in 2020
only 38.3%) The larger number of positive results translated into the
increase of the mean value. This is most clearly seen for <em>the</em>
<em>effects of debt instruments evaluation in fair value</em> entry, the
mean of which increased over eight times – from PLN 29 million to PLN
251.7 million.</p>
<p>When comparing the second year of the pandemic with the year before
it, a reversed trend can be seen. The number of reported negative
results increased, reflected in the average value, which, as shown in
Table 4, significantly decreased compared to both 2020 and 2019.
Particular attention should be drawn to the above mentioned entry of
<em>the</em> <em>effects of debt instrument evaluation in fair value by
other comprehensive income</em>. In 2019 its mean value amounted to PLN
29 million, in the first year of the pandemic it increased to PLN 257.1
million, and in the second year it fell to PLN -795.4 million. The
change of the mean value was consistent with the number of entities
reporting positive and negative results in this entry – in the year
before the pandemic, a positive value was reported by 52.5% of the
studied units, in the first year of the pandemic the share increased to
88%, and in the second year positive values were reported in only 21.1%
of them. This indicates that the effects of debt instrument evaluation
in the first year of the pandemic had a positive influence on
comprehensive income, and in the second year the influence was
negative.</p>
<p>As far as OCI not being the subject of reclassification is concerned,
attention must be drawn to the two most frequent entries. The first one
is <em>actuarial gains and losses</em>. Their mean value in the first
year of the pandemic was slightly lower with a simultaneous slight
decrease in the number of negative results (from 50 to 47), and an
increase of the positive ones. In the second year of the pandemic, the
mean value increased significantly (from PLN -17.4 million in the first
year to PLN 30 million in the second year) with a simultaneous increase
in the number of entities reporting positive results (from 12 to 46).
The other entry is <em>the</em> <em>effects of equity instrument
evaluation in fair value</em>. Even though it was not frequent, only in
fewer than 20% of the studied entities, in the year before the pandemic
the mean value amounted to only PLN 0.6 million, while in the first year
of the pandemic it grew to PLN 31.1 million with a similar structure of
positive and negative results. In the second year of the pandemic it
increased again to PLN 42.7 million, with a simultaneous growth in the
number of units reporting a positive result to 75%. It should be
emphasised that this entry manifested the highest mean values during the
entire pandemic period, which with the increasing number of positive
results affected the value of comprehensive income positively. It is
also worth adding that <em>the evaluation of debt instruments in fair
value</em> was the entry that manifested the highest (as to absolute
value) mean values within OCI being the subject of reclassification.
Therefore, the entries with the strongest influence on comprehensive
income in the pandemic period were those connected with the evaluation
of financial instruments, debt and equity ones. In the case of debt
instruments, in the first year of the pandemic, the influence was
positive, whereas as regards equity instruments, the impact was positive
in both years of the pandemic period.</p>
<p>In order to verify the significance of the differences concerning the
most important entries of the OCI in individual years of the pandemic
and before it, tests of significance for dependent variables were
conducted again. The H0 hypothesis assumed equality of mean
value of OCI (m1 = m2), whereas the H1
hypothesis assumed, in line with the values obtained earlier and
presented in Table 5, that the average was accordingly higher
(m1 > m2) or lower (m1 <
m2). In line with its assumptions, the one-tailed Student’s
t-test was used again in the analysis. H1, the values of the
Student’s t-test statistic and the probability value allowing to
rejecting H0 in favour of H1, are presented in
Table 7.</p>
<p><strong>Table 7</strong>. H1 with the values of the
Student’s t-test statistic and the probability value for the reported
OCI (the grey colour indicates statistically significant
dependencies)</p>
<p>
<img src="/articles/2022/Prewysz-Kwinto/media/image7.png" />
</p>
<p>Symbols: t – values of the Student’s t-test, p - the probability
value allowing rejecting H0 in favour of H1, m –
mean value</p>
<p>Source: own study.</p>
<p>The data included in Table 7 show that the values of all entries of
other comprehensive income being the subject of reclassification except
<em>exchange rate differences from the conversion of foreign units’
statements</em> were in the second year of the pandemic period
significantly lower than in the years 2019 and 2020. Similarly, the
values of other comprehensive income not being the subject of
reclassification except <em>equity instrument evaluation in fair
value</em> appeared statistically significantly higher in 2021 than in
2020 and 2019. As far as comparing the first year of the pandemic with
the preceding year is concerned, statistically significantly higher
values for <em>the</em> <em>effects of debt instrument evaluation in
fair value</em> and <em>exchange rate differences from the conversion of
foreign units’ statements</em> were demonstrated. It should be pointed
out that all the statistically significant differences were confirmed
with a very low probability value (p < 0.03).</p>
<h2>5. Conclusion</h2>
<p>The analysis of the formation of OCI reported in the financial
statements drawn up in accordance with IFRS by entities listed on the
Warsaw Stock Exchange presented in the study led to drawing multiple
conclusions.</p>
<p>During the pandemic period, slightly more units reported positive
values of OCI and this is more clearly seen in the second year. Despite
a higher number of positive results, a higher value of OCI in both
periods of the pandemic, when compared with the last year before it, was
reported by slightly more than one third of the studied units (38%).
Almost half of them reported higher in the first year and lower in the
second year values of OCI than before the pandemic. This was confirmed
by the calculated mean value, which in the first year of the pandemic
period was significantly higher than that in the year before it, but in
the second year significantly lower. This means that the pandemic did
not affect the OCI value in the same way in both years of its
duration.</p>
<p>Moreover, during the pandemic, the absolute value of mean value was
even several times higher with a significantly higher level of standard
deviation, which allows for the conclusion that during the pandemic
period the OCI achieved much higher positive and negative values than in
the preceding year. Thus, the two-year period of the pandemic caused
much stronger changes in the value of balance sheet items, the effects
of which are presented in the section of OCI than in the pre-pandemic
period. Additionally, the OCI itself had a much stronger impact on the
value of the comprehensive income.</p>
<p>In the whole studied period, among all the OCI entries, those being
the subject of reclassification to profit and loss were reported more
often than those not being the subject of such reclassification – and
this structure did not change much during the pandemic nor before it.
What is more, the frequency of reported individual OCI did not alter in
the whole studied period, and almost all entities reported identical
entries in each year. Thus, the Covid-19 pandemic did not contribute to
changes in the scope of the presented OCI.</p>
<p>Finally, the absolute value of OCI mean value being the subject of
reclassification was again higher during the whole pandemic period than
before it, which allows to conclude that it is OCI being the subject of
reclassification that influence comprehensive income of the studied
entities the most.</p>
<p>Regarding the OCI being the subject of reclassification, <em>exchange
rate differences from the conversion of foreign units’ statements</em>
and <em>the effects of evaluation of cash flow hedges</em> were reported
most often. Among the OCI not being the subject of reclassification
<em>actuarial gains and losses concerning employee benefits</em>
dominated, while other entries appeared much less frequently. Even so,
the conducted analysis showed that the entries with the strongest impact
on comprehensive income in the pandemic period were those connected with
the evaluation of financial instruments – debt ones and equity ones. In
the case of debt instruments, in the first year of the pandemic the
influence was positive, whereas as regards equity instruments, the
impact was positive in both years of the pandemic period.</p>
<p>To conclude, it should be indicated that because of the complexity of
the study, a detailed evaluation of the formation of the value of other
comprehensive income (OCI) with regard to the type of activity pursued
by the studied entities was not conducted. Due to the importance of the
issue, this will constitute the subject of a separate study.</p>
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<ol><li><p>The discussion concerned two alternative concepts: i.e.
clean surplus, in which all changes in equity not resulting from
transactions with shareholders must be included in an entity’s results
and dirty surplus, in which including changes of the elements of net
assets is allowed not in the result, but in equity balance. More in:
(Bek-Gaik, 2013, p. 23; Szychta, 2012).<a href="#fnref1">↩︎</a></p></li>
<li><p>Regulation No 1606/2002 of the European Parliament and
of the Council of 19 July 2002 on the application of international
accounting standards<a href="#fnref2">↩︎</a></p></li>
</ol>