Clarification or Confusion: A Textual Analysis of ASC 842 Lease Transition Disclosures

Enache, Luminița; Griffin, Paul A.; Moldovan, Rucsandra

doi:10.2139/ssrn.4169291

SSRN Journal

2022

DOI: 10.2139/ssrn.4169291

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Clarification or Confusion: A Textual Analysis of ASC 842 Lease Transition Disclosures

Luminița Enache

Paul A. Griffin

Rucsandra Moldovan

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2024

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Leasing Loses Altitude While Ownership Takes Off: Real Effects of the New Lease Standard

Li,

Venkatachalam

2024

The Accounting Review

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This paper evaluates the real effects of the new lease standard, ASC 842, on firms’ investment and operational outcomes. Using a sample of airline companies, we find that, subsequent to the promulgation of ASC 842 (2016–2018), public airlines reduce operating lease usage by about seven to ten percentage points relative to private airlines. The reduced lease usage is replaced by increased ownership, suggesting an equilibrium shift in firms’ investment due to changes in the cost-benefit tradeoffs associated with the operating lease classification. We also find evidence that the decline in lease usage hinders public airlines’ operational flexibility, as we observe more idle capacity in flights post-ASC 842. Facing excess capacity, public airlines seem to deploy their aircraft to shorter flying routes, raising the possibility of more wear and tear on the fleet. Overall, our evidence suggests that the new lease standard has intended and unintended real effects. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: M41; M48; D22; D24; D25; E22; G38.

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Leasing Loses Altitude While Ownership Takes Off: Real Effects of the New Lease Standard

Li,

Venkatachalam

2024

The Accounting Review

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Clarification or Confusion: A Textual Analysis of ASC 842 Lease Transition Disclosures

Cited by 1 publication

References 62 publications

Leasing Loses Altitude While Ownership Takes Off: Real Effects of the New Lease Standard

Leasing Loses Altitude While Ownership Takes Off: Real Effects of the New Lease Standard

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