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[연구]Who classifies interest payments as financing activities? An analysis of classification shifting in
2016.07.08 Views 1205 경영학연구분석센터
Journal of Accounting and Public Policy
Volume 35, Issue 4, July–August 2016, Pages 331–351
Bok Baik (a), Hyunkwon Cho (b), Wooseok Choi (c), Kwangjin Lee (d)
a Seoul National University Business School, 58-401, 1 Gwanak-ro, Gwanak-gu, Seoul 151-916, Republic of Korea
b University of Houston, C.T. Bauer College of Business, 334 Melcher Hall, Houston, TX 77204, USA
c Korea University Business School, 145 Anam-ro, Seongbuk-gu, Seoul 136-701, Republic of Korea
d Michigan State University, Eli Broad College of Business, N270 Business College Complex, 632 Bogue Street, East Lansing, MI 48824, USA
http://www.sciencedirect.com/science/article/pii/S0278425415000903
Abstract
In this study, we examine a firm’s classification shifting behavior in the statement of cash flows under the IFRS regime. Specifically, we examine the determinants and economic consequences of classification shifting to manage operating cash flows. Based on a sample of firms that mandatorily adopt IFRS in Korea, the result shows that financially distressed firms, firms with high interest payments, firms with high bank ownership, and Chaebol affiliated firms tend to shift their interest payments from operating to financing cash flows, thereby increasing the total amounts of operating cash flows. We also find evidence largely consistent with the view that investors discount operating cash flow surprises from classification shifting. Overall, we provide initial evidence that classification shifting exists in the statement of cash flows under the IFRS regime and its economic consequences are significant.
Volume 35, Issue 4, July–August 2016, Pages 331–351
Bok Baik (a), Hyunkwon Cho (b), Wooseok Choi (c), Kwangjin Lee (d)
a Seoul National University Business School, 58-401, 1 Gwanak-ro, Gwanak-gu, Seoul 151-916, Republic of Korea
b University of Houston, C.T. Bauer College of Business, 334 Melcher Hall, Houston, TX 77204, USA
c Korea University Business School, 145 Anam-ro, Seongbuk-gu, Seoul 136-701, Republic of Korea
d Michigan State University, Eli Broad College of Business, N270 Business College Complex, 632 Bogue Street, East Lansing, MI 48824, USA
http://www.sciencedirect.com/science/article/pii/S0278425415000903
Abstract
In this study, we examine a firm’s classification shifting behavior in the statement of cash flows under the IFRS regime. Specifically, we examine the determinants and economic consequences of classification shifting to manage operating cash flows. Based on a sample of firms that mandatorily adopt IFRS in Korea, the result shows that financially distressed firms, firms with high interest payments, firms with high bank ownership, and Chaebol affiliated firms tend to shift their interest payments from operating to financing cash flows, thereby increasing the total amounts of operating cash flows. We also find evidence largely consistent with the view that investors discount operating cash flow surprises from classification shifting. Overall, we provide initial evidence that classification shifting exists in the statement of cash flows under the IFRS regime and its economic consequences are significant.