al. (2010) manipulate where additional disaggregation and classification take place—either in the notes or on the face of the financial statements. They show that disaggregation and classification only in the notes can be a reasonable substitute for disaggregation and classification on the face.
Given that the Proposed Accounting Standards Update (FASB 2010b) for the leasing project only requires disaggregation in the notes, we designed a supplemental condition that replicates the capitalized/disaggregated condition with the exception that the capitalized lease obligation is disaggregated in the notes only and not on the face of the financial statements. All other aspects of the instructions and the experimental stimuli were identical to the original capitalized and disaggregated condition. We then recruited an additional 13 participants with demographic characteristics similar to the participants in our original experiment.
Several interesting findings appear in the results from this supplemental condition. First, the percentage of participants willing to lend to the lessee firm lies between the two capitalization percentages from our first experiment. More specifically, we find that 54 percent of participants are willing to lend to the lessee firm when the disaggregation occurs in the notes, as compared to the 47 percent willing to lend to the lessee firm when the renewal options were capitalized and aggregated with the rest of the lease obligation (z 1⁄4 0.38, p 1⁄4 0.35).24 Second, we find that the number of