Operating leases: Impact of operating leases recognized on financial statement and on financial policy in Spanish and British companies
Los arrendamientos operativos: impacto de su reconocimiento en los estados financieros y en la política de financiación de las compañías españolas y del Reino Unido
Abstract
The new proposal of lease accounting standards by the International Accounting Standards Board is being very controversial for its consequences on the financial statements of companies that use the leases for control and financing asset. Prior studies demonstrate the impact of operating leases recognized on balance and its impact on company results and basic ratios for analysis as leverage and profitability as well as its financial structure. In this work, from a sample for high number of companies, the impact on quoted companies is analyzed in 2 different countries with different accounting culture such as Spain and Great Britain. The results show that in both cases the impact is significant, being most important the sector of activity that the country. A new research line is opened for future research: To analyze the evolution in time of the impact and whether companies vary their financial policies when the new standard of leases is finally published.
Downloads
-
Abstract373
-
PDF (Español (España))206
References
[Abdullah y Alfan, 2005] M. Abdullah, E. Alfan. An insight of Malaysian companies treatment of leases. Internacional Review of Business Research Papers, 1 (2005), pp. 75-83
[ASB, 1992] Accounting Standard Board. Discussion draft: Statement of principles. Chapter 4. The recognition of items in financial statements, Accountancy Books, (1992)
[Altamuro et al., 2009] J. Altamuro, R. Johnston, S. Pandit, H. Zhang. Operating leases and credit assessments. Contemporary Accounting Research, 31 (2009), pp. 551-580
[Ashton, 1985] R.K. Ashton. Accounting for finance leases: A field test. Accounting and Business Research, 15 (1985), pp. 233-238
[Barral et al., 2006] A. Barral, I. Gómez, H. Molina. Impacto de la propuesta de reforma internacional sobre arrendamientos. Revista de AECA, 76 (2006), pp. 31-38
[Beattie et al., 1998] V. Beattie, K. Edwards, A. Goodacre. The impact of constructive operating lease capitalisation on key accounting ratios. Accounting and Business Research, 28 (1998), pp. 233-254
[Beattie et al., 2000] V. Beattie, A. Goodacre, S.J. Thomson. Recognition versus disclosure: An investigation of the impact on equity risk using UK operating lease disclosures. Journal of Business Finance & Accounting, 27 (2000), pp. 1185-1224 http://dx.doi.org/10.1016/j.jebo.2014.01.017
[Beattie et al., 2006] V. Beattie, A. Goodacre, S.J. Thomson. International lease accounting reform and economic consequences: The views of UK users and preparers. International Journal of Accounting, 41 (2006), pp. 75-103
[Bennett y Bradbury, 2003] B.K. Bennett, M.E. Bradbury. Capitalizing non-cancelable operating leases. Journal of International Financial Management and Accounting, 14 (2003), pp. 101-114
[Castelló Taliani, 1989] E. Castelló Taliani. Estudio económico de los contratos de leasing y su captación en los informes contables. Ed. ICAC, (1989)
[CAC, 2012] Chang & Adams Consulting (2012). The economic impact of the current IASB and FASB exposure draft on leases. Disponible en: http://www.centerforcapitalmarkets.com/wp-content/uploads/2010/04/2012-02-08-IASB-FASB-CA-Report-FINAL-v-3-_2_.pdf
[Dhaliwal et al., 2011] D. Dhaliwal, H.S. Lee, M. Neamtiu. The impact of operating leases on firm financial and operating risk. Journal of Accounting, Auditing & Finance, 26 (2011), pp. 151-197 http://dx.doi.org/10.1111/1475-6773.12226
[Duke et al., 2002] J.C. Duke, D.P. Franz, H.G. Hunt, D.R. Toy. Firm-specific determinants of off-balance sheet leasing: A test of the Smith/Wakeman model. Journal of Business and Management, 8 (2002), pp. 335-353
[Fito et al., 2011] Fito, M.A., Moya, S., Orgaz, N. (2011). Impact assessment of recognition versus note disclosure in operating leases. Actas del XVI Congreso de la AECA, Granada, 21 a 23, septiembre 2011.
[Fito et al., 2013] M.A. Fito, S. Moya, N. Orgaz. Considering the effects of operating lease capitalization on key financial ratios. Revista Española de Financiación y Contabilidad, XLII (2013), pp. 341-369
[Fulbier et al., 2008] R.U. Fulbier, J.L. Silva, M.H. Pferdehirt. Impact of lease capitalization on financial ratios of listed German companies. Schmalenbach Business Review (sbr), 60 (2008), pp. 122-144
[Goodacre, 2001] A. Goodacre. The potencial impact of enforced lease capitalisation in the UK retail sector. Working paper. University of Stirling, (2001)
[Goodacre, 2003] A. Goodacre. Assessing the potencial impact of lease accounting reform: A review of the empirical evidence. Journal of Property Research, 20 (2003), pp. 49-66
[Hales et al., 2012] J. Hales, S. Venkataraman, T.J. Wilks. Accounting for leases renewal options: The informational effects of unit of account choices. The Accounting Review, 87 (2012), pp. 173-197
[Han, 2010] Han, F. (2010). Lease accounting and the cost of equity capital. Doctoral Dissertations. University of Connecticut. Paper AAI3464372.
[Imhoff et al., 1991] E.A. Imhoff, R.C. Lipe, D.W. Wright. Operating leases: Impact of constructive capitalization. Accounting Horizons, 5 (1991), pp. 51-63
[Imhoff et al., 1997] E.A. Imhoff, R.C. Lipe, D.W. Wright. Operating leases: Income effects of constructive capitalization. Accounting Horizons, 11 (1997), pp. 12-32
[IASB, 2006] International Accounting Standard Board. IASB Update. March. Ed. IASB, (2006)
[IASB, 2007] International Accounting Standard Board. Information for Observers. Board Meeting 22 March 2007. Project: Leases. Academic Research on Lease Accounting (Agenda Paper 12D). Ed. IASB, (2007)
[Jaafar y McLeay, 2007] A. Jaafar, S. McLeay. Country effects and sector effects on the harmonization of accounting policy choice. ABACUS, 43 (2007), pp. 156-189
[Jamal, 2011] K. Jamal. A perspective on the joint IASB/FASB exposure draft on accounting for leases. Accounting Horizons., 25 (2011), pp. 861-871
[McGregor, 1996] W. McGregor. Accounting for leases: A new approach. Recognition by lessess of assets and liabilities arising under lease contracts. Ed. FASB, (1996)
[Mulford y Gram, 2007] C.Y. Mulford, M. Gram. The effects of lease capitalization on various financial measures: An analysis of the retail industry. Journal of Applied Research in Accounting and Finance., 2 (2007), pp. 3-13
[Nailor y Lennard, 2000] H. Nailor, A. Lennard. Leases: Implementation of a new approach. FASB, (2000)
[Nelson, 1963] A.J. Nelson. Capitalising leases: The effect on financial ratios. Journal of Accountancy, 41 (1963), pp. 49-58
[Pina Martínez, 1988] V. Pina Martínez. Efectos económicos de las normas contables. Colección Monografías, n.o 11. Ed. AECA, (1988)
[SEC, 2005] Securities and Exchange Commission (2005). Report and recommendations pursuant to section 401(c) of the Sarbanes-Oxley act of 2002 on arrangements with off-balance sheet implications, special purpose entities, and transparency of filings by issuers. January. Disponible en: http://www.sec.gov/news/studies/soxoffbalancerpt.pdf
The publications in this journal are subject to the following terms:
1. Ediciones de la Universidad de Murcia (EDITUM) and ASEPUC conserve the patrimonial rights (copyright) of the published manuscripts, and favour and allow their reuse under the licence of use indicated in point 2.
2. The manuscripts are published in the electronic edition of the journal under an Attribution-NonCommercial-NoDerivatives 4.0 International licence. It allows to copy, distribute and include the article in a collective work (for example, an anthology), as long as there is no commercial purpose, the article is not altered or modified and the original work is properly cited. This journal is free of charge for the Open Access publication. ASEPUC and EDITUM finance the productiona and publication costs of the manuscripts.
3. Conditions for self-archiving. Authors are permitted and encouraged to electronically disseminate the published version of their works, as it favors their circulation and dissemination and thus a possible increase in their citation and reach among the academic community.

