When the US and international accounting-standards boards published a draft of their new lease-accounting rules last summer, they defined the move as a significant post-financial-crisis change that would increase transparency for investors.¹ In theory, they’re right. Gone would be the distinction between operating and capital leases. Instead, companies would need to account on their balance sheets for every material asset they have the right to use and to include depreciation for those assets on their income statements.

Like other regulatory changes in the wake of the recent financial crisis, these have spurred lively debate among accountants and analysts. Indeed, in March 2011 there were some indications that the US Financial Accounting Standards Board (FASB) may have had a change of heart and decided to adopt something closer to the old rules.² Amid all these discussions, executives should remember that the implications for the value of individual companies are minimal. Companies might need to provide investors with more details on assumptions for specific leases and may have to amend some debt covenants and compensation contracts to account for mechanical changes in earnings before interest, taxes, depreciation, and amortization (EBITDA) and interest payments. But none of the changes that stem from the originally proposed new accounting rules for leases will make any difference to a company’s cash flows or to how it operates and creates value.