Determinants of the decision to capitalize finance leases by lessees : Australian evidence

The objective of this study is to examine the economic factors motivating Australian listed lessee firms to adopt capitalization or footnote disclosure of their finance lease commitments from 1985 to 1987 as permitted by the transitional provision of AAS 17. Six research hypotheses are developed from the economic consequences perspective. It is hypothesised that the decision to capitalize finance lease commitments is positively related to firm’s : (1) corporate structure, (2) size, {3) political visibility, _(4) financial performance, and (5) overseas association, and negatively related to (6) debt contract financial constraints. Support for these hypotheses would be construed as suggesting that capitalization is a means "for lessee firms to reduce or mitigate agency and/ or political costs and concurrently as a signal to the market that they are high quality firms. A-pooled multivariate cross-sectional analysis for 1985 to 1987 was performed incorporating sensitivity analysis to determine the "best" logistic regression model This model was then assessed to determine its validity and predictive, efficacy.

Grantor dc:publisher

Edith Cowan University, Research Online, Perth, Western Australia

Year dc:date

1995

Author dc:creator

• Hassan, Salleh B.

• Leases
• Australia
• Accounting
• Disclosure in accounting
• Lease and rental services

Repository record dc:identifier

https://ro.ecu.edu.au/theses/1172

OAI identifier oai:identifier

oai:ro.ecu.edu.au:theses-2173