The Effect of Leases Standard (IFRS 16) on Off – Balance Sheet Financing: An Empirical Study

Elsayed, Mohamed Abo Elazm; El Essely, Mohamed Ahmed; Farag, Lotfy El Refaey; Ganna, Mona Atef

doi:10.21608/abj.2025.447659

The Effect of Leases Standard (IFRS 16) on Off – Balance Sheet Financing: An Empirical Study

المؤلفون

¹ Demonstrator of Accounting, Accounting Department, Faculty of commerce Tanta University, Tanta, Egypt

² Professor of Financial accounting, Faculty of commerce Tanta University, Tanta, Egypt

³ Associate Professor of Accounting, Faculty of commerce Tanta University, Tanta, Egypt

10.21608/abj.2025.447659

المستخلص

PurposeThis study aims to examine the effect of the lease standard IFRS 16 and its Egyptian translation, EAS 49, on off-balance-sheet (OBS) financing, which is considered one of the most critical problems facing the financial statements users.
Design / methodology / ApproachThe researcher used both a qualitative and quantitative approach to analyze 43 companies' annual financial statements that were listed on the Egyptian stock market during the period from 2019 to 2022. Descriptive analysis, the T-test, and linear regression analysis are the three statistical techniques that have been applied. The methodology's objective was to investigate the relationship between independent variables (right-of-use asset (ROU) and lease liability) and dependent variables (assets, liabilities, debt-to-assets ratio (D/A), and debt-to-equity ratio (D/E)). These variables were used as a proxy for measuring how IFRS 16 (EAS 49) affects off-balance sheet financing.
Findings: The empirical study found that the application of IFRS 16 (EAS 49) has a positive, significant effect on OBS financing. These findings are consistent with the majority of previous studies.
Originality / Value / Recommendation Due to the lack of research that has discussed leases, the requirements, and their impact on OBS financing, especially in the Egyptian environment, this is due to the newness of lease standards. The study contributes to the literature and empirical research by illustrating how IFRS 16 eliminates OBS financing that leads to increased transparency and accuracy of financial statements. Therefor It is necessary for specialized professional organizations to arrange courses for accountants and auditors to develop the knowledge of their members. And Companies must comply with current international standards to enhance the quality of accounting reports.

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