Researcher ORCID Identifier
0009-0007-9968-3364
Graduation Year
2025
Date of Submission
4-2025
Document Type
Open Access Senior Thesis
Degree Name
Bachelor of Arts
Department
Economics-Accounting
Reader 1
Andrew Finley
Terms of Use & License Information
Rights Information
© 2025 Eduardo Hernandez
Abstract
I investigate whether the mandatory lease capitalization under ASC 842 led to measurable shifts in market-based assessments of firm risk, from both a creditor and investor perspective. Sampled firms and financial quarters are segmented based on lease intensity (a proxy for a firm’s reliance on leases) and firm size (based on market capitalization). Contrary to initial expectations, the results suggest that firms with higher lease intensity experienced a significant increase in stock returns and a decline in bond yields following the implementation of ASC 842, which indicates that the added transparency may have reassured equity and credit investors. This study also examines whether firm size moderates these outcomes and finds that size did not significantly affect stock returns, but small-cap firms faced higher borrowing costs in both loan and bond markets. These findings contribute to the ongoing debate over regulatory transparency and seek to respond to the FASB’s request for further insight into how financial markets interpret changes in lease recognition.
Recommended Citation
Hernandez, Eduardo, "How Did the Implementation of ASC 842 Affect Credit Markets and Stock Performance Among Publicly Traded Firms with Extensive Lease Obligations?" (2025). CMC Senior Theses. 3874.
https://scholarship.claremont.edu/cmc_theses/3874
