IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

Impact of Lease Capitalization on Financial Ratios of Listed German Companies

Listed author(s):
  • Rolf Uwe Fülbier
  • Jorge Lirio Silva
  • Marc Henrik Pferdehirt
Registered author(s):

    The separation of leases into operating and finance leases for accounting purposes can result in incentives to favor operating lease contracts, since they avoid on-balance-sheet debt. the IASB and FAsB are conducting a long-term joint project on leasing, following the G4+1 group’s research on possible improvements to lease accounting. One alternative is to treat all leases in a manner similar to today’s finance leasing. Our simulation results for Germany show notable changes in a variety of financial ratios, especially for assets and liability relations, which may trigger management with incentives to dampen these effects. Of note for standard setters, the effects of operating lease capitalization should not be overstated. Only minor effects can be observed for profitability ratios and market multiples often used for valuation purposes. Moreover, most industries remain almost unaffected and the relative ratio-based ranking of all sample companies does not change much. additionally, we observe that the common Creditstats® model yields somewhat comparable results.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    Download Restriction: no

    Article provided by LMU Munich School of Management in its journal Schmalenbach Business Review.

    Volume (Year): 60 (2008)
    Issue (Month): 2 (April)
    Pages: 122-144

    in new window

    Handle: RePEc:sbr:abstra:v:60:y:2008:i:2:p:122-144
    Contact details of provider: Postal:
    Geschwister-Scholl-Platz 1, 80539 Muenchen

    Phone: 0049 89 2180 2166
    Fax: 0049 89 2180 6327
    Web page:

    More information through EDIRC

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:sbr:abstra:v:60:y:2008:i:2:p:122-144. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (sbr)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.