III. METHODExperimental Design and

III. METHOD
Experimental Design and Overview :
In our experiment, participants in all treatment conditions are provided with selected data from two firms’ financial statements, including some common metrics used in loan agreements. Data relating to the first firm are identical across experimental conditions. For the second firm, we manipulate whether optional renewal periods of a lease are capitalized and, if so, whether the amount is combined in a single line with the fixed portion of the lease term or is presented on a separate line, resulting in a 1 3 3 experimental design (renewal options not capitalized; renewal options capitalized and aggregated; renewal options capitalized and disaggregated). Participants in all treatment conditions indicate which one of the two firms they will lend to, based on the information provided to them. Because we hold the underlying economics of the two firms constant across conditions, any differences in participants’ lending decisions across treatment conditions must be attributed to the variation in the accounting for and reporting of lease renewal options across conditions.