Contractual capitalization under TFRS 16 and operating performance: industry and profitability heterogeneity in Thai MAI firms

Purpose This study aims to investigate the relationship between contractual capitalization and operating performance following the adoption of TFRS 16. Specifically, the study examines whether right-of-use (ROU) assets and lease liabilities (LL) are associated with earnings before interest and taxes (EBIT) and whether these associations vary across industries and profitability levels. Design/methodology/approach The study analyzes firms listed on the Market for Alternative Investment (MAI) in Thailand during the post-TFRS 16 period. Drawing upon Agency Theory and Signaling Theory, the analysis employs fixed-effects panel regression with Driscoll–Kraay robust standard errors and quantile regression techniques. To capture industry heterogeneity, firms are classified into capital-intensive, service and space-dependent, and knowledge-based industries. Findings The results indicate that ROU assets are generally positively associated with operating performance, while the associations of lease liabilities vary substantially across industries and profitability levels. Lease liabilities are positively associated with EBIT among highly profitable firms in capital-intensive industries but negatively associated with operating performance in knowledge-based industries. Quantile regression further reveals substantial profitability heterogeneity, indicating that the operating implications of contractual capitalization differ across the profitability distribution. Research limitations/implications The study focuses on MAI-listed firms in Thailand and employs EBIT as the primary measure of operating performance. Future research may extend the analysis to alternative markets, performance measures and institutional settings. Given the observational design, the findings should be interpreted as associations rather than causal effects. Practical implications Managers should evaluate leased assets and lease obligations separately when making strategic resource-allocation decisions. Investors and policymakers should recognize that the economic consequences of lease capitalization vary across industries and profitability levels. Originality/value This study extends the IFRS 16 literature by distinguishing the operating implications of ROU assets from those of lease liabilities and by showing that these associations vary across industries and profitability levels. The findings provide a more context-sensitive understanding of contractual capitalization beyond its financial reporting consequences.