25/08/2021
| Kedmi Itay
All Press Releases In Subject:
The Financial Markets and Financial Stability
Abstract
In
2016, a new accounting standard for Leases
(IFRS
16) was issued, which substantially changes the accounting treatment
of operating leases. As a result, financial ratios of firms might
change dramatically, especially the leverage ratio. Using the
difference-in-differences approach, this paper examines the impact of
the disclosure regarding this standard, and its implementation, on
the risk-pricing of firms, as measured by the yield spreads of their
bonds. The results indicate that the yield spreads of the treated
firms rise in the first disclosure date, compared to the control
group. Thereafter, in the implementation date, there is no impact.
The results are stronger in firms that are expected to violate
financial covenants following the new standard
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