future cash flows, especially when this disaggregation takes place on the face of the financial statements.
However, it is not obvious that the boards would opt to require disclosure on the face, as we propose. This is, in part, because doing so, while arguably being decision useful given their tentative unit of account decision of how to include optional renewal periods in the measurement of the total lease liability, would make salient the recognition of obligations that may not meet the definition of a liability (i.e., ‘‘what-you-may-call-its’’). Nevertheless, we believe our findings (like other ex ante research) will be useful in helping the boards to make these sorts of difficult unit of account choices that often arise during deliberations. In particular, we do so by showing how disaggregation can be used to address informational issues arising from an expansive unit of account choice.
As with all research, it is important to consider potential limitations of this study. One potential limitation is that, while our participants have a significant amount of full-time work experience, they are not currently working as lenders. In addition, participants received no compensation for their decisions. Although professional work experience as a lender or as a credit analyst might mitigate the magnitude of the effects we document, we have no reason to expect that the directional nature of our predictions would change with different participants. Similar reasoning applies to the likely influence of monetary incentives on lending decisions. Nevertheless, future research might examine the extent to which different types of professional experience and/or incentive structures could alter the effects that we document in the present study.