We document that borrowing costs and credit ratings are less sensitive to off-balance sheet lease financing than to on-balance sheet debt financing, particularly for firms that are financially constrained and firms that have limited ability to use tax shields. This evidence is consistent with...

The Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) will re-expose in the first half of 2013 a revised joint proposal for a new lease accounting standard (FASB 2012). The proposed standard requires lessees to record operating leases as debt, making...