Keywords
lease accounting, transaction structuring, earnings management, management credibility
Abstract
Despite recent regulatory concerns regarding off-balance sheet financing, and concerns about lease accounting in particular, relatively little is known about how financial statement users view lease transaction structuring compared to other forms of earnings management. We examine sell-side financial statement analysts’ views on lease transaction structuring and its impact on their assessments of management credibility. Although operating leases often act as the prototypical example of transaction structuring, survey responses suggest that lease structuring and related voluntary reconciliations do not raise the same concerns for analysts as do other earnings management activities (which lower analysts’ perceptions of management credibility). Our findings are consistent with prior research demonstrating that, with precise accounting standards, managers are more likely to attempt earnings management by structuring transactions, but auditors are also less likely to adjust such attempts, and suggest that financial statement users may also be less concerned with transaction structuring than with other forms of earnings management.
Original Publication Citation
Krische, S., P. Sanders, and S. D. Smith. 2012. Lease transaction structuring, earnings management, and management credibility. Research in Accounting Regulation 24:33-39.
BYU ScholarsArchive Citation
Krische, Susan D.; Sanders, Paula R.; and Smith, Steven D., "Lease Transaction Structuring, Earnings Management, and Management Credibility" (2012). Faculty Publications. 8561.
https://scholarsarchive.byu.edu/facpub/8561
Document Type
Peer-Reviewed Article
Publication Date
2012
Publisher
Research in Accounting Regulation
Language
English
College
Marriott School of Business
Department
Accountancy
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