The information content of the exposure draft of Accounting Principles Board opinion no. 31 and Accounting series release no. 147 : (an empirical investigation)

Both the Exposure Draft of APB Opinion No. 31 and ASR No. 147 required the reporting of long term financial lease obligations in the general purpose statements of lessees. The economic consequences of these pronouncements have been debated since their issuance. This study assumes an efficient market; therefore, the economic effects of the accounting change resulting from the issuance of the Exposure Draft of APB Opinion No. 31 and ASR No. 147 are measured by examining security prices and changes in bond ratings. There is no prior research on the information content of the Exposure Draft of APB Opinion No. 31. Moreover, existing research on ASR No. 147 does not provide definite conclusions as to the effect of the disclosure requirements on lessee firms. The inconclusiveness of prior research on ASR No. 147 suggests that some of the information which it required may have been available in the securities market prior to the release of ASR No. 147. Hence, this study investigates security price reaction resulting from the earliest pronouncement of the new accounting change, the Exposure Draft of APB Opinion No. 31. [...]