The effects of new lease accounting standards on enterprises financial risk: evidence from China

Jinfeng Xue and Badrul Hisham Kamaruddin

Accounting Research Journal, 2026, vol. 39, issue 3, 337-355

Abstract: PurposeThis research aims to evaluate how the new lease accounting standards IFRS 16 and CAS 21 influence financial risk in enterprises; analyze the mediating effects of enterprise financing constraints, financing efficiency and real earnings management; examine the heterogeneous effects across different enterprise characteristics such as enterprise ownership concentration and leasing levels.Design/methodology/approachThis research uses the staggered implementation of CAS21 in China, selects annual data of 2,803 Chinese listed enterprises from 2018 to 2023 and adopts a multiple time point difference-in-difference model for analysis.FindingsThis study reveals that enterprises implementing the new standards have encountered an increase in financial risk; this increase averages about 16.55%. The new standards mainly increase the financial risks by increasing the degree of financing constraints, reducing financing efficiency and increasing the real earnings management. The impact is particularly significant for enterprises that have higher financing constraints and higher levels of leasing. There are also notable differences between enterprises with different financing efficiencies and ownership-concentration levels.Originality/valuePrevious studies only focused on a single accounting ratio risk indicator. To the best of the authors’ knowledge, this paper is the first to use the Z-score model for financial risk assessment and, for the first time, conducts in-depth analysis from the aspects of enterprise financing constraints, financing efficiency, real earnings management, ownership concentration and leasing levels. It provides a detailed overview of how the new standards influence enterprise financial risks in terms of both extent and direction.

Keywords: New leasing standards; Financial risk; Financing constraints; Financing efficiency; Real earnings management (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:eme:arjpps:arj-10-2024-0351

DOI: 10.1108/ARJ-10-2024-0351

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