Graduation Year
2025
Document Type
Open Access Senior Thesis
Degree Name
Bachelor of Arts
Department
Economics-Accounting
Reader 1
Joshua Rosett
Reader 2
Patrick Van Horn
Terms of Use & License Information
Abstract
This study examines the impacts of Accounting Standards Update 2016-02, also referred to as ASC 842 for the scope of this paper. ASC 842 was issued by the Financial Accounting Standards Board (FASB) in 2016, and it requires lessees to recognize right-of-use assets and lease liabilities on their balance sheets for fiscal reporting periods beginning after December 15, 2019. By essentially mandating the capitalization of operating leases, which previously were only recognized as annual rent expanse, ASC 842 marks a significant shift in accounting practices, altering the presentation of lease obligations and key financial metrics. Using panel data regression models, this research analyzes the standard's effects on firms’ financial statements and consequent financial metrics, as well as the impact on the equity market’s assessment of risk. The findings reveal shifts in total liabilities and property, plant, and equipment values, offering insights into how ASC 842 impacts the firms' investment decisions. They also show that equity markets responded with adjustments to Beta, a key measure of stock valuation risk.
Recommended Citation
Hasson, Sylvie, "The Impact of Lease Reporting Accounting Standard Changes on Balance Sheet Structure and Equity Market Risk Assessment" (2025). Scripps Senior Theses. 2447.
https://scholarship.claremont.edu/scripps_theses/2447
