Management Credibility and Investment Risk: An Experimental Investigation of Lease Accounting Alternatives

Susan D. Krische; Paula R. Sanders; Steven D. Smith

doi:10.2308/bria-50633

Management Credibility and Investment Risk: An Experimental Investigation of Lease Accounting Alternatives

Behavioral Research in Accounting ◽

10.2308/bria-50633 ◽

2013 ◽

Vol 26 (1) ◽

pp. 109-130 ◽

Cited By ~ 5

Author(s):

Susan D. Krische ◽

Paula R. Sanders ◽

Steven D. Smith

Keyword(s):

Experimental Investigation ◽

Financial Statement ◽

Investment Risk ◽

Managerial Reporting ◽

Risk Judgments ◽

Lease Accounting

ABSTRACT This paper examines how users' understanding of the financial statement impact of accounting alternatives and the disclosure choices management has made jointly influence users' assessments of management credibility and investment risk. Specifically, in a lease obligation setting, management's reporting choice (i.e., recognition versus disclosure), the presence of a supplemental reconciliation from disclosure to recognition, and the source of that reconciliation (as company management or an independent analyst) are manipulated. As predicted, the findings indicate that users assess a management credibility deficiency only when they understand both the financial statement implications of an incentive-consistent reporting choice and that management has not been forthcoming about that choice. In contrast, users' understanding of the financial statement implications of the reporting choice is sufficient to influence their investment risk judgments. This research extends the literature on managerial reporting by documenting necessary knowledge conditions for users to make differential assessments of managers.

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Equity Value Implications of Lease Accounting

Accounting Horizons ◽

10.2308/acch.2011.25.1.1 ◽

2011 ◽

Vol 25 (1) ◽

pp. 1-16 ◽

Cited By ~ 6

Author(s):

James Boatsman ◽

Xiaobo Dong

Keyword(s):

Equity Capital ◽

Financial Statement ◽

Net Income ◽

Cost Of Equity Capital ◽

Financial Statement Analysis ◽

Practical Applications ◽

Equity Value ◽

Operating Leases ◽

Deferred Tax Liabilities ◽

Lease Accounting

SYNOPSIS: The literature exhibits a long tradition of attention to the financial statement effects of accounting for operating leases. For the most part, that attention has focused on what are commonly viewed as errors in operating assets, deferred tax liabilities, debt, stockholders’ equity, and net income that, if not properly corrected, can lead to errors in financial statement analysis. There has been, at least, an implied effect of such financial statement analysis errors on estimated equity value. What has been lacking is a discussion of the precise nature of how the errors may, or may not, translate into errors in estimating equity value. We bring clarity to this matter through an example in which a nai¨ve reliance on financial statements unadjusted for the errors in accounting for operating leases has no effect on equity value estimated with three popular equity valuation models. We then discuss prior empirical evidence suggesting that the critical aspect of the example, namely the cost of equity capital is exogenously determined, is expected to be present in many practical applications. In short, lease accounting is often not a matter of consequence in the context of estimating equity value.

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Strategic Analysis and Auditor Risk Judgments

Auditing A Journal of Practice & Theory ◽

10.2308/ajpt-10147 ◽

2011 ◽

Vol 30 (4) ◽

pp. 149-171 ◽

Cited By ~ 15

Author(s):

Natalia Kochetova-Kozloski ◽

William F. Messier

Keyword(s):

Expert Panel ◽

Implementation Process ◽

Strategy Implementation ◽

Data Availability ◽

Financial Statement ◽

Risk Assessments ◽

Strategic Analysis ◽

Senior Managers ◽

Strategic Positioning ◽

Risk Judgments

SUMMARY The study investigates whether and how senior auditors' strategic analysis of a client affects their identification of significant business and financial statement risks, and their risk assessments. Sixty-seven senior auditors participated in an experiment that examined the effect of analyzing two aspects of strategic analysis (strategic positioning and the strategy implementation process) against performing no strategic analysis. An expert panel of senior managers was used to develop a benchmark for comparison purposes. Our results show that (1) auditors who performed guided strategic analysis did not identify more significant business and financial statement risks than auditors who did not perform strategic analysis, (2) senior auditors who performed strategic analysis of strategic positioning or the strategy implementation process assessed risk of material misstatement at the entity level more consistently with an expert panel than auditors who did not perform such an analysis, and (3) senior auditors' analysis of the client's strategy implementation process was associated with assessments of the strength of the control environment that were more consistent with the expert panel than assessments done by auditors who did not perform any strategic analysis or who performed only an analysis of strategic positioning. Data Availability: Contact the first author.

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Issues in Lessor Accounting: The Forgotten Half of Lease Accounting

Accounting Horizons ◽

10.2308/acch-10021 ◽

2011 ◽

Vol 25 (2) ◽

pp. 247-266 ◽

Cited By ~ 3

Author(s):

Mark P Bauman ◽

Richard N Francis

Keyword(s):

Balance Sheet ◽

Accounting Standards ◽

Decision Makers ◽

Financial Accounting ◽

Financial Statement ◽

International Accounting Standards ◽

Financial Accounting Standards Board ◽

Disclosure Quality ◽

Residual Values ◽

Lease Accounting

SYNOPSIS In July 2006, the International Accounting Standards Board and the Financial Accounting Standards Board (the “Boards”) added a leasing project to their agenda. In August 2010, the Boards jointly released an exposure draft proposing a “right-of-use” model for the recognition of lease-related assets and liabilities. In their deliberations, the Boards noted numerous studies focusing on lessee accounting, but very little research examining lessor-related topics. To address this gap in the literature, this paper identifies key reporting and disclosure issues associated with lessors, and suggests improvements that could be incorporated into lease accounting guidance. This study is based on an analysis of the financial statement disclosures of 57 of the 100 largest equipment lessors in the U.S. market. Disclosure quality, residual values, and the balance sheet impact of the proposal are examined, and numerous suggestions are offered to enhance the usefulness of lessor financial statement disclosures for decision makers.

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Analisis Penerapan PSAK 30 Dalam Penyajian Laporan Keuangan Lessor

Jurnal Ilmiah Akuntansi Kesatuan ◽

10.37641/jiakes.v6i3.304 ◽

2018 ◽

Vol 6 (3) ◽

pp. 239-246

Author(s):

Permana Saputra ◽

Siti Ita Rosita

Keyword(s):

Accounting Standards ◽

Financial Statements ◽

Financial Accounting ◽

Financial Statement ◽

Financial Position ◽

Subsequent Period ◽

Lease Contract ◽

Operational Activities ◽

Lease Accounting ◽

Research Show

This study aims to determine the system of financing, recording, and presentation of lease accounting contracts applied by the company whether it has been in accordance with the statement of financial accounting standards 30. The results of the research show that in its operational activities the company uses the method of financing lease, because in the lease contract the company transfers substantially all the risk and rewards associated with the ownership of the asset. In the contract the company recognizes assets in the from of finance lease receivables in the amount equal to the net rental ivestment. The receivables from rental receivablesare treated as principal payments which will be presented in the statement of financial position and the finance lease income to be presented in the statement of income. In general, the accounting of the company’s lease transactions in conformity with the statement of financial accounting standart 30 which has been described in the noted to the financial statements of the company. With the provisions of accounting for leases (PSAK 73) that have been retified by DSAK-IAI, in 2017 effective as of 1 Januari 2019, the company should consider the provisions in the application of the rental accounting policy in the subsequent period. Keywords: finance lease, financial statement, PSAK 30

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ANALISIS PENERAPAN OPERATING LEASE BERDASARKAN PSAK. NO 30 PADA PT. YOSEPHA MANOKWARI

GOING CONCERN : JURNAL RISET AKUNTANSI ◽

10.32400/gc.13.02.19634.2018 ◽

2018 ◽

Vol 13 (02) ◽

Author(s):

Tifani Jones ◽

Sifrid S. Pangemanan ◽

Steven J. Tangkuman

Keyword(s):

Accounting Standards ◽

Financial Statements ◽

Descriptive Study ◽

Financial Accounting ◽

Financial Statement ◽

Heavy Equipment ◽

Fixed Assets ◽

A Company ◽

Lease Accounting

PT. Yosepha is a company engaged in the services of contractors and suppliers who also have additional business to support the company and increase profits are rental of fixed assets. Type of lease applied by PT. Yosepha is an operating lease. Operating lease is an ordinary lease, whereby at the end of the lease term there is no option rights for the lessee or heavy equipment leased to remain owned by PT.Yosepha. In the lease activities conducted by PT.Yosepha must comply with the applicable accounting standards set out in statement of financial accounting standards number 30, because it is very impact on the financial statements generated by PT.Yosepha. The purpose of this study is to determine whether the application of lease accounting on PT.Yosepha has been in accordance with the statement of financial accounting standards number 30 and how the effect on the financial statements. The method used in this research is descriptive study. The result of the research is where PT.Yosepha has not totally applied lease accounting in this case that is operating lease in accordance with statement of financial accounting standards number 30 because there is a mistake in the disclosure and reporting so that the resulting financial statements are not clear so that it is not in accordance with applicable standardsKeywords: Operating Lease, Statement of Financial Accounting Standards Number 30, Financial Statement

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The Effect of Increased Audit Disclosure on Financial Statement Users’ Perceptions of Management, Auditors, and Financial Reporting: An Experimental Investigation

SSRN Electronic Journal ◽

10.2139/ssrn.2181624 ◽

2012 ◽

Cited By ~ 2

Author(s):

Marcus M Doxey

Keyword(s):

Experimental Investigation ◽

Financial Reporting ◽

Financial Statement

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Convergence On A Global Accounting Standard For Leases Impacts Of The FASB/IASB Project On Lessee Financial Statements

International Business & Economics Research Journal (IBER) ◽

10.19030/iber.v10i10.5980 ◽

2011 ◽

Vol 10 (10) ◽

pp. 55 ◽

Cited By ~ 2

Author(s):

Bob G. Kilpatrick ◽

Nancy L. Wilburn

Keyword(s):

Financial Statements ◽

Fortune 500 ◽

Financial Statement ◽

Matched Pairs ◽

Accounting Standard ◽

Fortune 500 Companies ◽

Operating Leases ◽

Accounting Rules ◽

A Company ◽

Lease Accounting

In this paper, we compare the current U.S. GAAP and IFRS lease accounting rules with the proposed rules under the joint FASB/IASB projects exposure draft as modified by their redeliberation decisions. Additionally, we discuss the potential financial statement impacts of the proposed changes and provide examples of the effects of constructive capitalization of operating leases on the financial statements and resulting ratios for matched pairs of Global Fortune 500 companies in industries, with each pair consisting of a company that follows U.S. GAAP versus one that follows IFRS.

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Life after Heart Transplantation

European Psychologist ◽

10.1027//1016-9040.7.4.285 ◽

2002 ◽

Vol 7 (4) ◽

pp. 285-294 ◽

Cited By ~ 2

Author(s):

Lucia Savadori ◽

Lorella Lotto ◽

Rino Rumiati

Keyword(s):

Heart Transplantation ◽

Frame Of Reference ◽

Physician Communication ◽

Risk Averse ◽

Medical Team ◽

Perceived Knowledge ◽

Surgical Technology ◽

Postoperative Therapy ◽

Life Expectation ◽

Risk Judgments

Progress in surgical technology and in postoperative therapy has remarkably increased life expectation after heart transplantation. Nevertheless, patients still show a resistance to resume a normal life after transplantation, for example, to return to work. In this study we assume that after surgery patients become risk averse because they achieve a positive frame of reference. Because of this propensity toward risk aversion, they withhold from engaging in behavior that their physical condition would allow them in principle. Coherent with this assumption we found that compared to the medical team patients overestimate the degree of risk for routine activities. The study also showed that the representation of risk by the patients could be captured by a dreadfulness factor and a voluntariness factor. Patients' risk judgments were strongly and specifically predicted by the perceived degree of dreadfulness of the activity and, to a lesser extent, by the perceived knowledge of the consequences. Implications for patient-physician communication were explored.

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