Flexibility in cash-flow classification under IFRS: determinants and consequences

• 成果类型: Article
• 署名作者: Gordon, Elizabeth A.; Henry, Elaine; Jorgensen, Bjorn N.; Linthicum, Cheryl L.
• 署名单位: Pennsylvania Commonwealth System of Higher Education (PCSHE); Temple University; Stevens Institute of Technology; University of London; London School Economics & Political Science; University of Texas System; University of Texas at San Antonio
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1007/s11142-017-9387-1
• 发表日期: 2017
• 页码: 839-872
• 关键词: earnings management; FINANCIAL RATIOS; INFORMATION; forecasts; accruals; debt; INVESTMENT; winners

摘要

International Financial Reporting Standards (IFRS) allow managers flexibility in classifying interest paid, interest received, and dividends received within operating, investing, or financing activities within the statement of cash flows. In contrast, U.S. Generally Accepted Accounting Principles (GAAP) requires these items to be classified as operating cash flows (OCF). Studying IFRS-reporting firms in 13 European countries, we document firms' cash-flow classification choices vary, with about 76, 60, and 57% of our sample classifying interest paid, interest received, and dividends received, respectively, in OCF. Reported OCF under IFRS tends to exceed what would be reported under U.S. GAAP. We find the main determinants of OCF-enhancing classification choices are capital market incentives and other firm characteristics, including greater likelihood of financial distress, higher leverage, and accessing equity markets more frequently. In analyzing the consequences of reporting flexibility, we find some evidence that the market's assessment of the persistence of operating cash flows and accruals varies with the firm's classification choices and the results of certain OCF prediction models are sensitive to classification choices.