* Corresponding author. Tel.: 1 213 740 5017; fax: 1 213 747 2815; e-mail: krs@almaak.usc.edu  This paper has substantially benefited from the comments and suggestions of S.P. Kothari (the editor), Doug Skinner (the referee and discussant), Ashiq Ali, Ray Ball, Mary Barth, Bill Beaver, Mary Harris, Sanjay Kallapur, Tom Lys, Lillian Mills, Krishna Palepu, Mort Pincus, Katherine Schipper, Mark Trombley, Terry Warfield, Ross Watts, John Wild, Jerry Zimmerman and the conference participants at the 1998 Journal of Accounting and Economics Conference. The research assistance of Marcella Feng and Irina Moroaica is gratefully acknowledged. Trezevant acknow- ledges the financial support provided by a KPMG Peat Marwick Faculty Fellowship and an Elaine and Kenneth Leventhal Research Fellowship. Journal of Accounting and Economics 26 (1999) 43 — 67 Is comprehensive income superior to net income as a measure of firm performance? Dan Dhaliwal, K.R. Subramanyam*, Robert Trezevant  College of Business and Public Administration, University of Arizona, Tucson, AZ 85721, USA  Leventhal School of Accounting and Marshall School of Business, University of Southern California, Los Angeles, CA, 90089-1421, USA Received 1 October 1997; received in revised form 1 October 1998 Abstract With the exception of financial firms, we find no evidence that comprehensive income is more strongly associated with returns/market value or better predicts future cash flows/income than net income. Moreover, the only component of comprehensive income that improves the association between income and returns is the marketable securities adjustment. Our results do not support the claim that comprehensive income is a better measure of firm performance than net income. Our results also raise questions about the appropriateness of items included in SFAS 130 comprehensive income as well as the need for mandating uniform comprehensive income disclosures for all industries.  1999 Elsevier Science B.V. All rights reserved. JEL classification: M41 Keywords: Capital markets; Summary measures of performance; Comprehensive in- come; SFAS 130 0165-4101/99/$ — see front matter  1999 Elsevier Science B.V. All rights reserved. PII: S 0 1 6 5 - 4 1 0 1 ( 9 8 ) 0 0 0 3 3 - 0