We examine whether adoption of FASB Interpretation No. 46/R (FIN 46), Consolidation of Variable Interest Entities-an Interpretation ofARB No. 51, changed the market valuation and related measurement reliability of synthetic lease liabilities. Adopted in 2003, FIN 46 requires financial statement recognition of many previously off-balance sheet structures, including synthetic leases. Synthetic leases are hybrid financing structures that, prior to FIN 46, allowed firms to maximize the benefits of asset ownership for tax purposes while retaining operating lease treatment within the firm’s financial statements. We identify a sample of 125 synthetic leasing firms impacted by FIN 46. Utilizing methodology consistent with Dhaliwal et al. (2011), we constructively capitalize these lease liabilities in the period preceding FIN 46 and compare market valuation of these liabilities with capitalized leases after adoption of the standard. We find that the market places greater weight on synthetic lease obligations recognized within the body of the financial statements than it does liabilities disclosed within the associated notes. Finally, we rely on econometric procedures developed in Barth (1991) and extended in Choi et al. (1997) to examine whether the differential market valuation of lease liabilities post FIN 46 is due in part to perceived differences in measurement reliability. The results indicate there is a post FIN 46 reliability effect for all lease liabilities examined. However, while the synthetic lease amounts are the most unreliable examined, they also experience the greatest increase in reliability post FIN 46, indicating that perceived measurement reliability explains in part differential market valuation associated with FIN 46. Our findings have the potential to inform the ongoing standard setting debate surrounding the possible capitalization of all leases. Further, our study also has economic implications for managers concerned with the potential constraints on asset financing options imposed by accounting regulation.