Journal of Financial and Quantitative Analysis Vol. 13 No. 5 1978
Sale-and-Leaseback Agreements and Enterprise Valuation
Abstract
The literature on leasing has generally concentrated on providing management with a selection criterion for the lease-versus-purchase decision; over the years, a variety of recommendations have been advanced ([1], [3], [6], [8], [16], and [18]). More recent papers, however, have shown that the terms of leasing contracts in a transaction-costless competitive capital market will inevitably be such as to render the stockholders of value-maximizing firms indifferent to that decision ([11] and [12]). Simply put, competition among potential lessors-together with the mandates of securities-price-equilibrating trading activities of investors in lessee and lessor firms—will necessarily drive the present values of the cash flows associated with lease arrangements to parity with direct asset purchase prices.
- DOI
- 10.2307/2330632
- Volume
- 13
- Issue
- 5
- Pages
- 871
- Sources
- crossref openalex