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Comparability of reported cash flows under IFRS: evidence from Germany

  • 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_ This HHL Working Paper was submitted to the journal Corporate Ownership and Control and published in the issue 12 (2015) 4, p. 906-927._x000D_

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Document Type:Working Paper
Author:Christian W. Kretzmann, Torben Teuteberg, Henning ZülchORCiD
Chairs and Professorships:Chair of Accounting and Auditing
Year of Completion:2015
HHL Working Paper 148. Leipzig: HHL Leipzig Graduate School of Management, 2015
Content Focus:Academic Audience
Peer Reviewed:Yes
Rankings:VHB Ranking / C