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A Survey of Corporate Leasing Analysis

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  • Tarun K. Mukherjee

Abstract

This paper reports results of a survey on leasing practices of large American firms. The survey finds that most firms, in compliance with theory, (i) treat leasing as a financing decision, (ii) use IRR and net advantage to leasing models recommended in textbooks, and (iii) employ after-tax cost of debt to discount relevant cash flows. The survey finds that about half the firms surveyed view lease and debt as substitutes, that most firms consider risk of obsolescence as the dominant reason for leasing, and that a majority expect the new tax laws to have little effect on their future leasing activities.

Suggested Citation

  • Tarun K. Mukherjee, 1991. "A Survey of Corporate Leasing Analysis," Financial Management, Financial Management Association, vol. 20(3), Fall.
    • Handle: RePEc:fma:fmanag:mukherjee91
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    Cited by:

    1. Kang, Sungjune & Long, Michael S., 2001. "The fixed payment financing decision: To borrow or lease," Review of Financial Economics, Elsevier, vol. 10(1), pages 41-55.
    2. Chenchuramaiah T. Bathala & Tarun K. Mukherjee, 1995. "A Survey of Leasing in Small Firms," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 4(2), pages 113-127, Fall.
    3. Sungjune Kang & Michael S Long, 2001. "The fixed payment financing decision," Review of Financial Economics, John Wiley & Sons, vol. 10(1), pages 41-55, March.
    4. Emhjellen, Magne & Løvås, Kjell & Osmundsen, Petter, 2009. "LNG Project Valuation with Financial Leasing Contracts," UiS Working Papers in Economics and Finance 2009/15, University of Stavanger.
    5. Elizabeth Devos & Erik Devos & He Li & Desmond Tsang, 2022. "Operating Lease as Alternative Financing for REITs: a Viable Strategy or a Sign of Trouble?," The Journal of Real Estate Finance and Economics, Springer, vol. 65(2), pages 153-180, August.

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