Role of Off-Balance Sheet Lease Financing on Capital Structure and Financial Distress

Document Type : Original Article

Authors

1 Assistant professor ,Faculty of Management and Accounting of Islamic Azad University karaj Branch, Iran.

2 Master of Accounting , Faculty of Management and Accounting of Islamic Azad University karaj Branch, Iran.

Abstract

Operating leases have grown significantly as a source of corporate financing. In business world, financing is one of the essential issues that companies are usually faced. Access to sources with low-cost and low- risk is an important aim for managers. In spite of the effects of off  Balance sheet  activities on assets, they are just disclosed in the notes to the financial statements. In this research we have studied the Role of Off  Balance Sheet Lease Financing in Capital Structure and financial distress. In this regard, a sample of 75 companies listed in Tehran Stock Exchange over the period of  2006 - 2014 have been selected. In this study two hypotheses were developed. The results of the first hypothesis show that there is significant relation between Off  Balance  Sheet Financing‌ and debt ratio .The second hypothesis results indicate there is relation between Off  Balance Sheet and financial distress, but the adjusted coefficient determination indicates the relationship is too weak.

Keywords

Accounting and Auditing Research
Volume 11, Issue 41
April 2019
Pages 37-52

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