The effect of operating lease capitalization to audit fees

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master_Aikala_Linda_2018.pdf (708.8 KB)

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School of Business | Master's thesis
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Date

2018

Department

Laskentatoimen laitos

Major/Subject

Mcode

Degree programme

Accounting

Language

en

Pages

75

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Abstract

The main objective of this study is to find out whether capitalization of operating leases has an effect on audit fees. I assume capitalized operating leases to correlate positively with audit fees. Additionally, the effect of capitalized operating lease assets and total assets to audit fees is compared and assumed to be equal. The study is a quantitative study, where the main research method is an OLS regression analysis. The data is collected from Audit Analytics and Compustat databases and it contains 731373 observations from American companies during the years 2000-2016. Financial institutions are excluded because the focus is on lessees’ accounting. Operating lease liabilities and assets are capitalized on the balance sheet using a method presented by Imhoff et al. (1991). The central finding of this study is that capitalization of operating leases has a positive effect on audit fees. The effect is significant per se as well as when compared to the effects of other audit fee attributes. Also, the effect of capitalized operating lease assets and total assets is found not to be equal.

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Thesis advisor

Jarva, Henry

Keywords

operating lease, financial lease, capitalization, audit fees

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https://urn.fi/URN:NBN:fi:aalto-201810055251

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[gradu] Kauppakorkeakoulu / BIZ