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Appears in Collections:Accounting and Finance Journal Articles
Peer Review Status: Refereed
Title: Operating leases and the assessment of lease-debt substitutability
Authors: Beattie, Vivien
Goodacre, Alan
Smith, Sarah Jane
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Keywords: Operating leases
Capital structure
Lease-debt substitutability
Issue Date: Mar-2000
Publisher: Elsevier
Citation: Beattie V, Goodacre A & Smith SJ (2000) Operating leases and the assessment of lease-debt substitutability, Journal of Banking and Finance, 24 (3), pp. 427-470.
Abstract: Operating leases are estimated in the current paper to be approximately thirteen times larger than finance leases, on average. In recognition of this, the paper investigates the degree of substitutability between leasing and non-lease debt using a comprehensive measure of leasing, improving on the partial measures used in prior research. Operating lease liabilities are estimated using the 'constructive capitalisation' approach suggested by Imhoff, Lipe and Wright (1991, Accounting Horizons 5, pp. 51-63), modifed to incorporate company-specific and UK-relevant assumptions. The results imply that leasing and debt are partial substitutes, with £1 of leasing displacing approximately £0.23 of non-lease debt, on average, consistent with the argument that lessors bear some risks which are not inherent in debt contracts. These findings suggest that substitution effects are not uniform across lease types.
Type: Journal Article
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Rights: Published in Journal of Banking & Finance by Elsevier; Elsevier believes that individual authors should be able to distribute their accepted author manuscripts for their personal voluntary needs and interests, e.g. posting to their websites or their institution’s repository, e-mailing to colleagues. The Elsevier Policy is as follows: Authors retain the right to use the accepted author manuscript for personal use, internal institutional use and for permitted scholarly posting provided that these are not for purposes of commercial use or systematic distribution. An "accepted author manuscript" is the author’s version of the manuscript of an article that has been accepted for publication and which may include any author-incorporated changes suggested through the processes of submission processing, peer review, and editor-author communications.
Notes: JEL classification: G32
Affiliation: University of Glasgow
Accounting and Finance
Accounting and Finance

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