Too Uncertain to Lease? Economic Uncertainty and Corporate Leasing

ABSTRACT Leasing provides firms with a flexible way to seize business opportunities. In this study, we provide robust evidence that firms lease less when the economy becomes less predictable. This effect is more pronounced for firms with greater financial constraints or higher firm risk. Firms' dependence on leasing to acquire growth opportunities amplifies this negative impact, while economic expansions and risks associated with delayed decisions partially offset it. Moreover, leasing contributes to higher earnings growth when macroeconomic uncertainty is greater.