This paper argues that leasing, as an important but often ignored source of external financing, facilitates the allocation efficiency of finance. We document a large overestimation of measured finance misallocation (Whited and Zhao, 2021) when lease-induced debt is ignored among US manufacturing...

We show that firms collect more than 70% of their cash flow in the second half of the fiscal year, and firms that collect more cash by year-end earn a 6% higher per annum risk premium and save more cash. We rationalize these facts in a quantitative investment-based asset pricing model. Immediate...

Leased capital accounts for a large fraction of public U.S. firms' total productive physical capital. In this paper, we extend the neoclassical investment q theory with financial frictions by explicitly considering firms' option to lease. Our model features firms' optimal buy-versus-lease...