Operating Lease Research Articles

ЭКОНОМИЧЕСКАЯ СУЩНОСТЬ ЛИЗИНГА КАК ЭФФЕКТИВНОГО ИНСТРУМЕНТА ФИНАНСИРОВАНИЯ ИНВЕСТИЦИОННОЙ ДЕЯТЕЛЬНОСТИ ПРЕДПРИЯТИЙ

The article deals with the development of market relations through the use of a leasing form of financing. The relevance of the study is determined, which lies in the multilayer process of technical re-equipment of enterprises, which requires solving many problems. In this regard, the authors of this article propose a mechanism for leasing financing to enhance and develop the investment activities of enterprises. Through the analysis of foreign and Russian economic literature, the economic essence of leasing has been studied. Based on the positions of foreign and Russian scientists, it can be noted that leasing is treated as a source of financing with certain benefits for both the lessor and the lessee. During the study, the main categories of costs associated with the use of fixed assets were identified, and a scheme of the main categories of costs was developed. This scheme reflects the main types of costs that depend on various factors, such as the information process, the type of fixed asset and its characteristics, economic variables. Based on the study of methods for calculating leasing payments, the author’s method for calculating leasing payments is presented, taking into account risk insurance in financial and operational leasing. This method takes into account the depreciation cost of the leased property, determining the coefficient of effective use of fixed assets.

Does ASC 842 Increase Operating Lease Information?

Does ASC 842 Increase Operating Lease Information?

Does US GAAP Update 2016-02 Increase Operating Lease Information and Visibility?

Does US GAAP Update 2016-02 Increase Operating Lease Information and Visibility?

AN ANALYSIS OF THE PERFORMANCE OF THE AVIATION INDUSTRY IN INDONESIA: IN PANDEMIC PERIOD WITH SERVQUAL METHOD AND IMPORTANCE PERFORMANCE ANALYSIS

The aviation industry is one of the most globally affected industries by the COVID-19 pandemic. It employs millions of people and supports tens of millions of others, as well as being the nerve center of international business and tourism. The losses of aviation industry will extend to its branches industries. The determination of policies that are not in favor of the industry related to the Avtur VAT, disharmony between ministries has caused the impact of this covid-19 adding heavy burden in industry sector. High operational costs, aircraft leasing, maintenance and others will be higher if the exchange rate also increases. This study aims to determine the analysis of the performance of national aviation industry due to the Covid19 pandemic. The results of this study are expected to be used as input in formulating policies in order to increase economic value in the aviation industry. Method of research which was done, namely comparing literature reviews from journals that discussed airlines with the use of Servqual theory and applied the Importance Performance Analysis method, and the authors made the descriptive analysis. The results of the study showed that covid 19 had a significant impact on the aviation industry, and the results of the performance analysis suggested that in order to survive in Covid-19 condition, the government needed to involve to provide a stimulus to the aviation industry.

AN ANALYSIS OF THE PERFORMANCE OF THE AVIATION INDUSTRY IN INDONESIA: IN PANDEMIC PERIOD WITH SERVQUAL METHOD AND IMPORTANCE PERFORMANCE ANALYSIS

The aviation industry is one of the most globally affected industries by the COVID-19 pandemic. It employs millions of people and supports tens of millions of others, as well as being the nerve center of international business and tourism. The losses of aviation industry will extend to its branches industries. The determination of policies that are not in favor of the industry related to the Avtur VAT, disharmony between ministries has caused the impact of this covid-19 adding heavy burden in industry sector. High operational costs, aircraft leasing, maintenance and others will be higher if the exchange rate also increases. This study aims to determine the analysis of the performance of national aviation industry due to the Covid19 pandemic. The results of this study are expected to be used as input in formulating policies in order to increase economic value in the aviation industry. Method of research which was done, namely comparing literature reviews from journals that discussed airlines with the use of Servqual theory and applied the Importance Performance Analysis method, and the authors made the descriptive analysis. The results of the study showed that covid 19 had a significant impact on the aviation industry, and the results of the performance analysis suggested that in order to survive in Covid-19 condition, the government needed to involve to provide a stimulus to the aviation industry.

The effect of financial analysts on the economic implications of disclosed lease information – a note

PurposeThe purpose of this paper is to investigate whether financial analyst coverage affects the dissemination of disclosed operating lease information into cash flow predictions and stock prices.Design/methodology/approachThe difference in lease expense between capital/finance lease and operating lease reporting is estimated based on the approach in Hsieh and Su (2015). This difference is referred to as the earnings impact from operating lease capitalization and is only available from footnotes. The authors then include the level of financial analyst following in a cash flow model to study its impact on the cash flow predictive value of the earnings impact. Similarly, the level of financial analyst following is inserted in an earnings-return model to assess the effect of analyst coverage on the association between contemporaneous stock returns and earnings impact.FindingsThe authors find that the cash flow predictive value of the earnings impact shifts to the interaction between analyst coverage and the earnings impact, suggesting that the decision-usefulness of the earnings impact is conditioned on the level of analyst following. Nevertheless, the authors find that the earnings impact continues to have explanatory value for the contemporaneous stock returns, while the interaction between analyst coverage and the earnings impact does not. This finding suggests that the earnings impact is already fully reflected in stock prices regardless of analyst following.Research limitations/implicationsSince the estimation of the earnings impact from reporting operating leases as capital leases is based on the method developed by Imhoff et al. (1991), the results and inferences are thus constrained by the validity of the method.Practical implicationsThe authors find that financial analyst activities accelerate the incorporation of the earnings impact from operating lease capitalization in cash flow predictions, but it does not promote the impounding of the earnings impact into stock prices. This finding suggests that financial analysts' influence on the dissemination of the earnings impact hinges on the type of economic activity, and failing to consider the financial analyst following in studying the cash flow predictive value of the earnings impact would obscure the findings.Originality/valueThe authors extend the findings of prior research that financial analysts' activities promote the incorporation of firm-specific information into stock prices by investigating the impact of financial analysts on the dissemination of disclosed operating lease information.

Operating lease obligations and corporate cash management

Our study addresses two issues overlooked in prior research: Does a firm's future operating lease obligations influence its current cash holdings? Does this relationship contribute to the temporal increase in corporate cash holdings? We provide evidence that these future obligations significantly influence a firm's cash holdings and contribute to the temporal increase in U.S. corporate cash holdings. Consequently, our findings are consistent with the options offered by operating leases to young growing firms and the effect of these operating lease obligations on the firm's operating leverage.

A novel supply chain of straw briquette fuel and the optimal way to acquire fixed assets

Space heating using straw briquette fuel in China rural is an important method to replace fossil fuels and reduce greenhouse gas emissions. However, the price of straw briquette fuel is high in traditional supply chain. Therefore, a novel closed-loop supply chain centered on energy service station is proposed. An appropriate way to acquire fixed assets can promote the rapid development of energy service station. In order to find a better solution, the methods of net present value and entropy weight are adopted. The results show that the priority order for small-scale energy service station is operating lease (OL), purchasing with loans (PL), purchasing with own fund (PF) and financial lease (FL), while that for large-scale energy service station is PL, OL, PF, FL. The results indicate that for small-scale energy service station, the optimal way to acquire fixed assets is affected by loan interest rate, rent interest rate and discount rate, while for large-scale energy service station, the optimal way to acquire fixed assets is mainly affected by loan interest rate, and the discount rate and rent interest rate have a negligible influence on the decision.

Operating Lease as Alternative Financing for REITs: a Viable Strategy or a Sign of Trouble?

Extant REIT research largely overlooks operating leases as an alternative source of financing. In this study, we hand-collect lease information of 334 unique REITs over the period of 1993 to 2018, and we document that an increasing number of REITs have been including operating leases in their capital structure to finance income-generating investment properties. We examine the determinants of the operating lease decision and find that REITs which adopt operating leases tend to be larger and have more growth opportunities as measured by Tobin’s Q. But they also have higher leverage, report lower funds from operations, and higher risk. We further find that operating lease intensity for REITs is negatively affected by credit ratings, but not by growth opportunities. Lastly, we examine the market effect related to operating lease decision and find that REITs with operating leases are associated with lower shareholder returns. Overall, our findings imply that operating leases are employed as an alternative financing source by REITs that are highly levered and cannot rely much on their internal funding. As a result, the market does not view the use of operating leases in the REIT sector favorably.

СПЕЦИФИКА УЧЕТА И РАСЧЕТА ОПЕРАЦИЙ АРЕНДНЫХ ОТНОШЕНИЙ В УЧРЕЖДЕНИЯХ УИС

The article reveals the organizational and legal aspects of rental relations in the institutions of the penitentiary system. It contains recommendations on the application of the federal accounting standard for public sector organizations Rent, discloses the procedure for accounting for operating and financial leases, determining the amounts of obligations to pay rent. Institutions of the penal correction system of Russia are non-profit public institutions, i.e. represent the state institutions in charge of execution of the state functions to ensure the implementation of laws of the Russian Federation of powers of public authorities, financial activities which are performed at the expense of the corresponding budget based on budget estimates. A PIS institution can be either a tenant or a landlord. If the institution of the UIS acts as a tenant, then it is enough for it to perform all the necessary procedures from the placement

Economic Consequences of Operating Lease Recognition

The Financial Accounting Standard Board’s Accounting Standards Update No. 2016-02 generated considerable debate between managers and standard setters. The purpose of our study is to understand the reporting effects of ASU 2016-02 and how its issuance and implementation affected managers’ operational behavior and the reported performance of the firm. We find evidence that after issuance, managers changed their operational behavior by decreasing their use of long-term operating leases, and this decrease relates to reporting incentives. However, we find no evidence that investors perceived loss of firm value or that firms suffered a decrease in performance. Thus, our evidence is not consistent with negative views expressed by managers. Our study adds to an interesting literature on the impact of changes in accounting standards on managers’ operating decisions and economic consequences for firms.

Capitalization Versus Disclosure: The Impact of Operating Lease Capitalization on Managerial Leasing Decisions

I examine whether and how the recognition of operating leases on balance sheets influences managerial leasing decisions. In 2019, the FASB implemented ASC 842, which requires companies to capitalize operating leases. Because operating lease information was previously disclosed in footnotes, it was unclear whether capitalization would make any difference to managers or financial statement users. Upon the new standard's adoption, I find a marked decrease in firms' use of operating leases. This decline is driven by lease-intensive and less-levered firms. I also document a systematic substitution of operating leases with short-term and variable leases, which are both still allowed to be left off balance sheet. These findings consistently suggest that the elimination of perceived off-balance-sheet reporting benefits serves as the channel through which the new standard affects leasing decisions. Overall, I provide evidence that disclosure location (footnote vs. balance sheet) exerts a real effect on managerial behavior. This study responds directly to the FASB's call for research that examines the standard's real effects.

Explore the Lessee Accounting Treatment When Utilizing the Islamic Financial Leasing

Abstract This study aims to discuss the effects of the AAIOFI accounting standards of financial leased assets on the accounting treatment of the lessee in the case of using the Islamic finance lease. The importance of this study became evident when AAIOFI announced Islamic accounting standards with a significant difference between the IFRSs about the recognition of leased financial assets. Islamic financial institutions recognize the financial leased assets following AAIOFI accounting under long-term assets in the statement of financial position. This study used the interviews as a qualitative research method with financial managers of Jordanian companies using Islamic financial leasing. This study reached the conclusion that both Islamic financial leasing parties recognize the assets in the long-term asset side. The recommendations to avoid the inflation of the Islamic financial leased assets will be by applying a reasonable accountancy treatment by the lessee and consider it as operational leasing with proper justification for the non-compliance with the IFRS.

Operating lease decision among east Asian firms; critical factors for sustainable development

The purpose of this article is to identify the determinants of the operating lease among Malaysian firms in order to ensure the sustainable development of the firms. Data are collected from the top 100 listed companies in seven sectors of the economy covering 2005–2014. The pooled ordinary least square, fixed effect and random effect models were used for estimation. A robust SE estimation was also applied for cross‐sectional and time dependence estimation. The empirical results of the F‐test, LM test, and Hausman test suggest that the fixed‐effect model is the most appropriate in the Malaysian lease context. The robust SE test confirms the findings of the previous models. The results of the fixed effect model indicate that lease has a negative relationship with FAE, a positive relationship with interest cost (IC), a negative relationship with profit, and a positive relationship with size, and tax rate.

The examination of operational leasing in term of Turkish accounting regulations

Purpose- The purpose of this study is to explain the accounting principles for the issues that are special in operating leasing transactions in the framework of Tax Procedure Law, General Communique on Accounting System Application, Turkish Accounting and Financial Reporting Standards and the Financial Reporting Standard for Large and Medium-Sized Businesses. Methodology- Accounting of operating leasing transactions will be handled within the framework of existing accounting regulations. Thus, similarities and differences in the accounting of these transactions will be revealed. Findings- In TFRS 16, which was put into practice instead of TAS 17, it was stated that the right of use should be shown in assets and the lease obligations should be shown in liabilities without discriminating financial or operational leases for the lessee. In terms of the leaser, the classification of operations and financial leases continued, as in TAS 17. In TAS 17 and SME FRS Chapter 15, the distinction between operational and financial lease remains valid for the lessee and the lessor. It has been determined that only provisions regarding financial leasing are included in VUK, and accounts that will be used only for leasing transactions are included in MSUGT. Conclusion- Prediction of a uniform rental model for lessee businesses within the scope of TFRS 16, it is expected that these types of businesses will have significant impacts on ensuring the fair presentation of their assets and liabilities and increasing the comparability of financial statements.

UFRS 16 Kiralamalar Standardının Kiracının Finansal Tabloları Üzerine Etkileri: Seçilmiş Hava Yolu İşletmelerinde Bir İnceleme (Effects of IFRS 16 Leases Standard on Financial Statements of Lessee: An Analysis on Selected Airline Companies)

Purpose – The aim of this study is to examine the effect of IFRS 16, which started to be applied instead of IAS 17 in the accounting and reporting of lease transactions, on the financial statements, ratios and indicators of the lessee. Financial reports of the airline companies that have a high volume of operational leases have been used in this paper. Design/methodology/approach – Analytical comparison and ratio analysis methods were adopted in the study. In the first step, 17 different effects are identified which are expected to have an impact on lessee's financial statements, ratios and indicators because of IFRS 16. Then the financial reports of Turkish Airlines, Pegasus Airlines, Lufthansa Airlines and Scandinavian Airlines which were published in compliance with IFRS 16 were examined in order to see whether the expectations are met or not. Findings – The results reveal that almost all of the expected effects occur. Findings which are contrary to expectations are not mainly due to IFRS 16. Discussion – The findings show that IFRS 16 creates changes in the capital and profit structures of enterprises. When other factors remain constant IFRS 16 will cause higher market value/book value ratios for businesses in high volume operating leases. In addition, IFRS 16 increases both short and long term financial risks of lessee enterprises and cause asset efficiency to appear low.

An efficient online auction for resource leasing in cloud radio access networks

This work studies the emerging C-RAN market in a 5G wireless network where mobile operators lease computation and communication resources from the tower company to serve wireless users. We propose an online C-RAN auction where each mobile operator bids for three types of resources in a future time window: wireless spectrum at base stations (BSs), front-haul link capacities, and mobile BS instances at the mobile cloud. We target an online C-RAN auction that executes in polynomial time, elicits truthful bids from mobile operators, and maximizes the social welfare of the C-RAN eco-system with both spectrum cost at BSs and server cost at the mobile cloud considered. We consider two business models of the tower company, and show how the marriage of i) a new Fenchel dual approach to convex optimization with ii) the posted pricing framework for online auction design can help achieve the three goals simultaneously, and evaluate the efficiency of our online C-RAN auction through both theoretical analysis and empirical studies.

Investment in innovative development of enterprises

Purpose. The aim of the article is scientific and theoretical substantiation of the essence and mechanisms of investing in innovative development of enterprises. Methodology of research. General scientific and special methods are used in the process of research, in particular: system analysis – to substantiate the essence of investing in innovative development of enterprises; abstract and logical and graphic – in determining the possible options for innovation and investment process of restoration of material and technical base for production and stages of the investment logistics chain of investment development of enterprises. Findings. The essence of investing in innovative development of enterprises is determined based on the generalization of scientific approaches, which is manifested by the involvement of real and potential internal and external investment resources, sources, levers and measures. Such innovative development, taking into account the logistics chain, is aimed at finding and efficient use of investment resources, possible options for restoring the material and technical base of production and modernization of enterprises in the conditions of neo-industrialization. Different vector influence of factors on the given course of investment projects leads to qualitative, quantitative and structural changes of production and economic activity of enterprises on an innovative basis and achievement of high efficiency in case of coordination and joint efforts for the decision of problems of strategic orientation and definition of investment priorities. The necessity and possible variants of restoration of material and technical base and stages of logistic chain of investment of development of enterprises, innovative projects for introduction of fundamentally new technologies and expansion of assortment at the expense of new creative products, transition to higher technological ways, replenishment of available intellectual assets and maintenance of innovative development of enterprises are proved. It is determined that currently the most acute problem for investors is the protection of their rights and the possibility (ease) of doing business. Therefore, the state's efforts should be aimed at solving problems in the commercial sphere and creating a favourable business environment, increasing investment in agriculture, stabilizing sources and optimizing capital structure, ensuring effective distribution of investments in the formation of assets of agricultural producers by their size. Originality. The definition of the essence of investing in innovative development of enterprises has been further developed; the scheme of possible variants of innovation and investment process of restoration of material and technical base for production of high-tech production taking into account stages of an investment logistic chain in the conditions of neo-industrialization is formed. Practical value. The results of the study can be used to expand the base, diversify sources and increase investment by enterprises on the basis of self-financing; corporatization; lending; vendor, operational and electronic leasing or sales; attracting investment resources through the issuance of Eurobonds, obtaining loans from international financial and banking institutions, as well as targeted financing with the participation of credit agencies and a combination of all methods. Also, the results of the study can be used to increase investment in the creation and commercialization of innovations and enhance innovative development of enterprises, the main priorities of which should be the skilful implementation of internal and external factors to ensure production efficiency and customization and individualization of new innovative products to consumers. Key words: investment, modernization, investment project, innovations, investments, technologies, products, development, enterprise, attractiveness, commercialization, efficiency.

Did the Recognition of Operating Leases Cause a Decline in Equity Valuations?

We examine whether investors react to a significant change in balance sheets, absent a significant change in underlying economics. Beginning in 2019, ASC 842 requires the recognition of operating leases, which were previously only disclosed in the footnotes to the financial statements. This change in accounting standard results in firms with significant operating leases recognizing a considerable increase in debt. We find that firms with significant operating leases, on average, earn negative returns around the initial recognition of their operating leases. For example, firms in the top decile of operating lease intensity experience a mean abnormal return of -3.10% around their first quarter 2019 earnings announcements. We do not find that concurrent trade tensions between the United States and China explain the valuation decline. Our results provide timely, new evidence consistent with equity market prices reflecting an inadequate level of fundamental analysis.

A Transfer Deep Q-Learning Framework for Resource Competition in Virtual Mobile Networks With Energy-Harvesting Base Stations

This article considers the problem of resource sharing in a virtual mobile network with energy-harvesting base stations (BSs), where several virtual mobile operators (VMOs) lease radio resources (e.g., radio channels and green BSs) from a mobile network owner (MNO). The VMOs want to provide subscribed users with the best performance while ensuring minimal leasing costs. We aim to find the optimal resource leasing scheme for a VMO in order to maximize utility within the uncertainties of harvested energy, request arrivals, and resource prices. We first formulate the problem as a Markov decision process, during which the VMOs compete with each other for the radio resources by dynamically announcing their resource requirements to the MNO. We, then, employ a deep Q-learning algorithm so the VMO can find the optimal solution by interacting with the environment. With this algorithm, artificial neural networks are used to approximate the Q-value function, which can work effectively with large state and action spaces. We further employ the idea of transfer learning, which exploits the strategies learned in historical periods to speed up the learning process of the target task. Finally, we present comprehensive simulations to evaluate the performance of the proposed scheme under various configurations.