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An empirical investigation of the cross sectional determinants of lease use

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Abstract

This paper examines the determinants of cross-sectional variation in lease ratios. Results indicate that leases substitute for debt and that relative lease use is negatively related to the size of the lessee. Leased assets, as a fraction of total assets, are negatively related to the financial strength of the lessee. Relative lease use is positively related to the lessee's level of non-debt tax shields, and some support is found for a negative relationship between leasing and the tax rate. Additionally, asset factors, as proxied by industry, provide most of the explanatory power of the model.

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Authors and Affiliations

  1. Seattle University, Seattle, WA

    Suzanne M. Erickson (Associate Professor of Finance)

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  1. Suzanne M. Erickson
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Erickson, S.M. An empirical investigation of the cross sectional determinants of lease use. J Econ Finan 17, 17–28 (1993). https://doi.org/10.1007/BF02920028

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  • DOI: https://doi.org/10.1007/BF02920028

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