The Effects of Operating Leases Capitalization on Financial Statements and Accounting Ratios: A Literature Survey

The purpose of this paper is to survey empirical papers about the effects of operating leases capitalization on accounting ratios and financial statements. In this paper, we focus on the new requirements and changes related to financial statements and we try to discover particularly the lessee accounting requirements. The paper analyses published research papers for the period between 2000 and 2015 which demonstrate the impact of the lease capitalization on accounting ratios and financial statements and these papers are mainly empirical studies. We extract the sample, ratios examined, findings and conclusions of these empirical studies. The results of these academic researches show that there is no common agreement. However the changes of lease accounting and the constructive capitalization of operating leases will mostly influence the financial statements and the key accounting ratios. In this paper, we focus deliberately the papers that assess the changes to lessee accounting because the new lease standard IFRS 16 Leases, which was published in 13 January 2016, substantially changed the lessees' requirements. The paper lays out a current situation survey and gives brief information about the new lessee accounting and their impacts which are prospective to be worthwhile for users and preparers of financial reports, academics and researchers.