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The Financial Impact of the Proposed Amendments to IAS 17: Evidence from Belgium and the Netherlands


  • Deborah BRANSWIJCK


  • Stefanie LONGUEVILLE

    (Ghent University College, Belgium)

  • Patricia EVERAERT

    (Ghent University, Belgium)


Prior literature examined the financial impact of capitalizing operating leases by using the constructive lease capitalization method of Imhoff et al. (1991). The empirical evidence of these studies results in the perception that operating leases lead to off-balance financing, improvements of financial ratios and earnings enhancement in the U.K. (e.g. Beattie et al., 1998) and in the U.S.(e.g. Ely, 1995). Therefore, the IASB published in 2010 the exposure draft for the new standard on lease accounting (IAS 17). The most striking change is the elimination of the difference between finance and operating lease. Our study investigates the impact of the proposed adaptation for listed companies in Belgium and the Netherlands for 2008. Our results indicate that debt to equity ratio, return on assets and the current ratio are significantly affected by capitalizing operating leases. Furthermore, the results show that the impact on financial ratios differs among industries.

Suggested Citation

  • Deborah BRANSWIJCK & Stefanie LONGUEVILLE & Patricia EVERAERT, 2011. "The Financial Impact of the Proposed Amendments to IAS 17: Evidence from Belgium and the Netherlands," Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 10(2), pages 275-294, June.
  • Handle: RePEc:ami:journl:v:10:y:2011:i:2:p:275-294

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    References listed on IDEAS

    1. Sharpe, Steven A. & Nguyen, Hien H., 1995. "Capital market imperfections and the incentive to lease," Journal of Financial Economics, Elsevier, vol. 39(2-3), pages 271-294.
    2. Mike Adams & Philip Hardwick, 1998. "Determinants of the leasing decision in United Kingdom listed companies," Applied Financial Economics, Taylor & Francis Journals, vol. 8(5), pages 487-494.
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    More about this item


    International accounting; lease accounting; lease capitalization; financial ratios; listed firms;

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting


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