This study examines how the listing status affects a firm’s choice of
lease accounting, using 7,023 firm-year observations that record either
an operating or a capital lease from 2001 to 2013 in Korea. We find that
unlisted firms are more likely to opt for operating leases, and to have
a higher ratio of operating leases than listed firms are. These results
indicate that unlisted firms tend to prefer operating leases which can
be used as a tool to avoid increasing debt levels and to benefit from
off-balance sheet financing (or unrecorded liabilities), compared to
listed firms. This study contributes to the current accounting
literature as it is the first to provide empirical evidence regarding
the impact of the listing status on a firm’s lease accounting.