Graduation Year

2024

Date of Submission

4-2024

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics-Accounting

Reader 1

George Batta

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Terms of Use for work posted in Scholarship@Claremont.

Rights Information

2024 Katherine A Ventura

Abstract

This paper explores the implications of the new lease recognition under Accounting Standards Update No. 2016-02, Leases (ASU 2016-02, Topic 842) on lending activity in the real estate industry. Previous research on the influence of financial contracting costs on incentives for lease capitalization highlights the importance of leases in business operations. This study explores how ASU 2016-02 has changed current trends in the market and loan structures. The relationship between a firm’s costs of external funds and incentives to lease is examined before a company has adopted ASU 2016-02 and after a company has adopted ASU 2016-02. The findings suggest higher lease financing incentives before the new standard.

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