Date of Award

Summer 2021

Document Type


Degree Name

Doctor of Business Administration (DBA)

Committee Chair

Earl Godfrey

Committee Co-Chair (if applicable)

Felice Policastro


The airline industry in the United States represents fertile ground for research due to its susceptibility to extraneous demand shocks such as fuel price hikes, terrorist attacks, and global pandemics coupled with high leverage and high reliance on leasing. Accounting Standards Codification (ASC) 842: Leases became effective January 1st, 2019, requiring capitalization of the majority of leased assets. This study was motivated by how the act may have affected both reported airline liquidity and attempts to restructure leases to avoid capitalization, which may provide an initial impact. The objective of this study was to examine whether passage of ASC 842: Leases has affected both reported airline liquidity among large, publicly-traded US airlines and potential lease restructure attempts by examining reported liquidity metrics used by financial users such as creditors and stockholders. Using a sample of large, publicly-traded airlines incorporated in the US, the current study used quarterly Securities and Exchange Commission (SEC) filings from 2017-2019 to determine if passage of the act was associated with a change in reported liquidity and possible restructure attempts. MANOVA with follow-up ANOVA was used to determine any change in the means of selected liquidity ratios attributable to ASC 842: Leases. The results indicated a significant overall effect and significant associations between the act and a decrease in the means of the quick ratio and net current assets as a percentage of total assets ratio. No significance was found between the act and the cash ratio. These findings are significant due to the high demand for liquidity and threat of extraneous demand shocks. The results provide early evidence that suggest management have not attempted lease restructures to circumvent the capitalization requirements of the act and warrants further research to investigate the generalizability of these findings.

Creative Commons License

Creative Commons Attribution-Noncommercial 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial 4.0 License

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Accounting Commons