Economic consequences of discussed changes in lease accounting : a content based analysis of due process comment letters

Titelangaben

Fehr, Jane ; Fülbier, Rolf Uwe:
Economic consequences of discussed changes in lease accounting : a content based analysis of due process comment letters.
2010
Veranstaltung: European Accounting Association (EAA): 33th Annual Congress , 19.-21. Mai 2010 , Istanbul, Turkey.
(Veranstaltungsbeitrag: Kongress/Konferenz/Symposium/Tagung , Paper )

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Abstract

In response to perceived difficulties with existing lease
accounting standards in force worldwide, IASB and FASB issued a discussion paper which basically proposes that all lease contracts should be recognized on balance sheet. Standard setters have to overcome the imbalance of preparers and users lobbying and obtain ex ante evidence on the potential economic consequences of the lease accounting reform. This paper reports the results of a content analysis of comment letters submitted to the IASB and FASB in response to the discussion paper “Leases–Preliminary Views” (March 2009). Based on 300 responses, our findings indicate that respondents across all identified interest groups (academics, financial institutions, investors, lessee companies, lessor companies, standard setting bodies, and public accountants) anticipate significant economic consequences. Apart from the general anticipation that the administrative burden for lessees will increase, there is a clear expectation by all interest groups that the proposal would impact on key financial ratios and reported gearing. This is considered likely to lead to renegotiation of debt covenants, problems in obtaining new ways of financing, a reduction in ratings for some companies, and adversely affected company evaluations. Moreover, all interest groups anticipate that lease terms would become shorter to minimize balance sheet obligations, and some believe that the proposals would make lease financing less attractive.