Impact of lease capitalization on the financial ratios of listed German companies

Titelangaben

Fülbier, Rolf Uwe ; Lirio Silva, Jorge ; Pferdehirt, Marc Henrik:
Impact of lease capitalization on the financial ratios of listed German companies.
2006
Veranstaltung: European Accounting Association (EAA): 29th Annual Congress , 22.-24. März 2006 , Dublin, Ireland.
(Veranstaltungsbeitrag: Kongress/Konferenz/Symposium/Tagung , Paper )

Volltext

Link zum Volltext (externe URL):

Abstract

The separation of leases into operating and finance leases for accounting purposes can result in incentives to favour operating lease contracts since they avoid on-balance sheet debt. The IASB is conducting an active research project on leasing, following the G4+1 group's research on possible improvements to lease accounting. One discussed alternative suggests treating all leases similar to today's finance leasing. Previous studies have simulated this accounting treatment following the Imhoff/Lipe/Wright (1991, 1997) constructive capitalization method. Our study is - to our knowledge - the first simulation for Germany based on a modified constructive capitalization method and, additionally, a factor model used by Standard & Poor's (CreditStats®). In line with prior literature, our results show notable changes in a variety of financial ratios. Clustering the sample into different industries, we detect significant differences between industry groups. However, the relative ratio-based ranking of the sample companies does not change much. Additionally, we observe that the CreditStats® - model yields fairly comparable results.