The Effects of Leasing on Cost of Debt and Credit Structure

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School of Business | Bachelor's thesis
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Date

2024

Department

Laskentatoimen laitos

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Mcode

Degree programme

Laskentatoimi

Language

en

Pages

32 + 8

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Abstract

This thesis examines the impact of leasing on the cost of debt and credit structure. Specifically, it explores the relationship between leasing and conventional debt using insights from existing literature and financial data from 25 large Finnish listed companies. Employed quantitative methods include financial ratio analysis, a correlation matrix, and a regression model. The study identifies significant variations in leasing usage among the sample companies. Unlike prior studies, this thesis does not find evidence of perfect substitutability or complementarity between leasing and conventional debt, indicating a more complex relationship. Notably, the narrower differences observed in the effects on the cost of debt and credit capacity may be linked to the practical implementation of IFRS 16. These findings contribute to the understanding of corporate finance and potential role of leasing in optimizing capital structures.

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Thesis advisor

Keloharju, Roope

Keywords

leasing, debt, liability structure, cost of debt, credit capacity

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https://urn.fi/URN:NBN:fi:aalto-202501191339

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[kand] Kauppakorkeakoulu / BIZ