Date of Award


Document Type



Edith Cowan University

Degree Name

Master of Business


School of Business


Faculty of Business

First Supervisor

Theo Christopher


The objective of this study is to examine the economic factors motivating Australian listed lessee firms to adopt capitalization or footnote disclosure of their finance lease commitments from 1985 to 1987 as permitted by the transitional provision of AAS 17. Six research hypotheses are developed from the economic consequences perspective. It is hypothesised that the decision to capitalize finance lease commitments is positively related to firm’s : (1) corporate structure, (2) size, {3) political visibility, _(4) financial performance, and (5) overseas association, and negatively related to (6) debt contract financial constraints. Support for these hypotheses would be construed as suggesting that capitalization is a means "for lessee firms to reduce or mitigate agency and/ or political costs and concurrently as a signal to the market that they are high quality firms. A-pooled multivariate cross-sectional analysis for 1985 to 1987 was performed incorporating sensitivity analysis to determine the "best" logistic regression model This model was then assessed to determine its validity and predictive, efficacy.

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