Leases : service contracts or investment and financing?
Abstract/Contents
- Abstract
- This study seeks to address what lease attributes separate service contracts from investment and financing for leases from the perspectives of both users and preparers. Based on the prediction of future operating income and the assessment of equity risk, my findings suggest that the lessee's effective ownership percentage, not the real estate/equipment partition proposed by the standard setters, helps separate service contracts from investment and financing transactions for leases. Hence, a classification method based on the lessee's effective ownership percentage reflects the heterogeneity of leases better than that based on the real estate/equipment partition. Using disclosed contingent and minimum rental payments from retailers, I find that only contingent rental payments are significantly reduced in economic downturns. For instance, the ratio of contingent rental payments to sales declines by 32% from 2008 to 2009, whereas the ratio of minimum rental payments to sales increases by 6% in the same period. I also provide evidence that investors include minimum rental payments but ignore contingent rental payments in the assessment of equity risk. Therefore, based on different behaviors in business cycles and equity risk assessment, my findings support excluding contingent rental payments from the measurement of lease assets and liabilities. Finally, I analyze the comment letters submitted by preparers, and find that real estate lessees are more likely to oppose treating all leases as investment and financing than equipment lessees.
Description
| Type of resource | text |
|---|---|
| Form | electronic; electronic resource; remote |
| Extent | 1 online resource. |
| Publication date | 2014 |
| Issuance | monographic |
| Language | English |
Creators/Contributors
| Associated with | Wang, Zach Zhiguang |
|---|---|
| Associated with | Stanford University, Graduate School of Business. |
| Primary advisor | Barth, Mary E |
| Thesis advisor | Barth, Mary E |
| Thesis advisor | Beaver, William |
| Thesis advisor | McNichols, Maureen, 1953- |
| Thesis advisor | Piotroski, Joseph D. (Joseph David) |
| Advisor | Beaver, William |
| Advisor | McNichols, Maureen, 1953- |
| Advisor | Piotroski, Joseph D. (Joseph David) |
Subjects
| Genre | Theses |
|---|
Bibliographic information
| Statement of responsibility | Zach Zhiguang Wang. |
|---|---|
| Note | Submitted to the Graduate School of Business. |
| Thesis | Thesis (Ph.D.)--Stanford University, 2014. |
| Location | electronic resource |
Access conditions
- Copyright
- © 2014 by Zhiguang Wang
- License
- This work is licensed under a Creative Commons Attribution Non Commercial 3.0 Unported license (CC BY-NC).
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