Christian W. Kretzmann, Torben Teuteberg, Henning Zülch

• IFRS are intended to provide users with transparent and comparable financial information. However, in contrast to US GAAP and German GAAP, IFRS offer considerable flexibility regarding the classification of interest and dividends in the statement of cash flows. We explore the reporting practice of German listed firms and shed light on the determinants of classification choices which aim to increase operating cash flow (OCF). Our findings support prior research in that firms tend to increase OCF under specific circumstances, especially when they are highly leveraged and/or less profitable. Moreover, we find that industry practice plays a major role in determining firms’ reporting choices. Overall, our results cast doubt on whether the advantages of the flexibility offered under IFRS outweigh the disadvantages of reduced comparability._x000D_ A previous version of the article was published as <link http://www.hhl.de/en/research/publications/detail-page/?tx_publikationen_pi1%5Buid%5D=4655 _blank external-link-new-window "Opens external link in new window">HHL Working Paper 148</link>.