In this design, a comparison of lending decisions in the ‘‘Renewal options not capitalized’’ and the ‘‘Renewal options capitalized and aggregated’’ conditions shows the impact of capitalizing optional lease periods. The only difference between the two conditions is that the first condition exempts renewal options from the capitalization requirement, while the second condition requires it.16 Next, a comparison of lending decisions in the ‘‘Renewal options capitalized and aggregated’’ condition and the ‘‘Renewal options capitalized and disaggregated’’ condition shows the impact of alternative presentation formats, holding constant the requirement to capitalize optional lease periods. The only difference between these two conditions is that the first condition does not distinguish between ‘‘fixed’’ and ‘‘optional’’ periods in presenting financial information relating to the lease, while the second condition does. Finally, a comparison of the decision in ‘‘Renewal options not capitalized’’ and the ‘‘Renewal options capitalized and disaggregated’’ conditions
reveals whether disaggregated presentation of the overall lease liability enables participants to reverse the presentation effects that arise when capitalizing renewal periods. In other words, if participants’ lending decisions across these two conditions do not significantly differ, then that would suggest that disaggregation enhances comparability by helping participants to treat the lessee firm similarly in economically equivalent conditions.