Are Leases and Debt Substitutes? Evidence from Belgian Firms
Finance theory suggests that leases and corporate debt are substitutes. However, empirical evidence is mixed. The contribution of the present paper is to test the substitution hypothesis for a sample of 1,066 large Belgian non-financial firms for the 1992-1994 period, considering different debt categories, including intra-group loans. Belgium provides an interesting case to investigate the leasing decision because tax differences between lessor and lessee do not matter. We find that long-term bank debt and intra-group debt are substitutes for lease financing. However, we do not find a one-to-one relationship, which indicates that leases and long-term debt are not perfect substitutes.
Year of publication: |
1999
|
---|---|
Authors: | Deloof, Marc ; Verschueren, Ilse |
Published in: |
Financial Management. - Financial Management Association - FMA. - Vol. 28.1999, 2
|
Publisher: |
Financial Management Association - FMA |
Saved in:
Saved in favorites
Similar items by person
-
Leases and debt : complements of subsitutes? Evidence from Belgian SMEs
Deloof, Marc, (2007)
-
Intragroup debt, intragroup guarantees, and the capital structure of Belgian firms
Verschueren, Ilse, (1999)
-
Informatieproblemen, ondernemingsfinanciering en liquide reserves van belgische ondernemingen
Deloof, Marc, (1998)
- More ...