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The new IASB and FASB models for leases aim to improve the quality of financial reporting. To this end, both standard setters impose the recognition of assets and liabilities for operating leases. Meanwhile, preparers have been strongly lobbying against these changes, as in their view the new treatment will lead to negative economic consequences. We undertake a value-relevance study to examine whether as-if capitalised operating leases are priced by market users in a relatively unexplored setting. We consider Spanish listed firms, and employ handcollected data on operating leases disclosed in the notes to the financial statements to constructively capitalise the assets and liabilities. Our analysis suggests that investors in code-law countries with less developed markets and low enforcement quality do not behave any differently to those in common-law countries that have more developed markets and stricter enforcement policies. Investors equally value recognised debts and operating lease liabilities resulting from information in the notes in retail sectors. In our view, these results could provide some comfort to managers in the most affected industries, as they suggest the change will not have a major impact on the stock exchange.

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This paper analyzes the consequences of the change in the accounting rules about operating leases in the companies and users of financial information. Design/methodology: We use the constructive capitalization method to estimate the liabilities and leased assets and perform an ex ante analysis of the regulatory impact in the IBEX 35 non-financial companies. Non-parametric tests are employed to examine the effect on certain ratios, and through a multivariate regression we investigate the business characteristics that explain the variation of EBITDA. Findings: The ratios under study are significantly affected by the capitalization of operating leases. The explanatory analysis shows that larger companies, which have a higher market valuation and belong to the retail sectors are the ones with a greater increase in EBITDA. Research limitations/implications: The sample size is small, which implies some caution in the generalization of the results. Certain hypotheses have been introduced to apply the constructive method, although the sensitivity tests confirm that the results are robust. Practical implications: In certain cases, to avoid non-compliance with restrictions, particularly in debt contracts, contract renegotiations should be initiated. The constructive method yields liabilities and assets significantly smaller than other simpler methods (such as the factor method), so these results can be a relief for certain non-sophisticated users. Social implications: Investors, shareholders and lenders, and other users will have more transparent information, which should improve their decision-making. Originality/value: The study of the impact on the magnitudes of the balance sheet and the financial ratios is complemented with a descriptive analysis, which takes into account the industry, and with the modeling of the explanatory factors of the change in EBITDA.

PurposeGoodwill recognized in a business combination is one of the most controversial issues in financial reporting, and is subject to a vast amount of disclosure in the financial statements. Based on the impression management framework, this paper investigates the managerial determinants of compliance with the disclosure requirements on the goodwill impairment test.Design/methodology/approachThe authors construct a disclosure index and hand-collect the information disclosed in the notes to the financial statements. The authors perform univariate and multivariate analyses, estimating panel data models in Spanish IBEX 35 firms, in 2008–2017.FindingsCompliance with the impairment test information requirements is used as an impression management strategy to conceal opportunistic behavior related to non-impairment and signal positive values related to growth opportunities and low leverage.Research limitations/implicationsThe results are based on a single country, characterized by low enforcement and although that helps to consider the role of impression management under a compulsory reporting system, it also requires some caution in their generalization.Practical implicationsThe results might be useful for advancing the current International Accounting Standards Board (IASB) project, but also for other stakeholders since understanding firms' behavior facilitates making decisions. They might also help managers to reconsider their disclosure strategies towards third parties.Social implicationsThe results may be useful for society, since they show a likely consequence of managerial opportunistic behavior. They could also assist regulators and enforcers to identify firms with incentives for non-compliance.Originality/valueThis study provides a theoretical and conceptual contribution to explain how firms use disclosure as a managerial strategy in a rather different context to the one used in previous research since it focuses on audited and regulated corporate reports. It is based on the impression management as the vehicle to strategically manipulate users' insights and decisions.