TY - JOUR
T1 - The Informational Effects of Tightening Oil and Gas Disclosure Rules
AU - Badia, Marc
AU - Duro, Miguel
AU - Jorgensen, Bjorn N.
AU - Ormazabal, Gaizka
AU - Christensen, Hans B.
N1 - Funding Information:
* Accepted by Edward Riedl. An earlier version of this paper was presented at the 2017 Contemporary Accounting Research Conference, generously supported by the Chartered Professional Accountants of Canada. We thank Edward Riedl, two anonymous reviewers, Hans B. Christensen (discussant), Trevor Harris, Bob Herz, Colleen Honigsberg, Alon Kalay, Sharon Katz, Steve Rock, Gil Sadka, Cathy Schrand, and participants at the 2017 CAR Conference, 2015 EAA Conference, and seminars at Chinese University of Hong Kong, IESE, LSE, UIC, and WHU Koblenz for helpful com-ments and suggestions. We thank Wanyi Chen, Tian Fu, Shisheng Jiang, Lichao Liu, Colin McGee, Du Nguyen, Joaquín Peris, Elie Toubiana, and Javier Sánchez Vázquez de Parga for their research assistance. We are grateful to the CanOils Database Ltd. for giving us access to its database and thank Jonathan Moore and Tracey Nabe for their continued help throughout this study. We also thank Nathan Hedley and his team for kindly giving us access to the Evaluate Energy database and for their technical support. We benefited from conversations with industry practitioners and regulators. Spe-cifically, we are indebted to John Lee (SEC Academic Engineering Fellow); David Elliot, Carrie Nermo, and Brian Banderk (Alberta Securities Commission); Gary Finnis (partner at Sproule Associates Ltd.); Douglas Isaac and Jim Saloman (partners at PricewaterhouseCoopers). Gaizka Ormazabal thanks the Marie Curie and Ramon y Cajal Fellow-ships. Marc Badia and Gaizka Ormazabal acknowledge financial contributions from the Spanish Ministry of Economics, Industry and Competitiveness, grants ECO2010-19314, ECO2011-29533, and ECO2016-77579-C3-1-P. Miguel Duro acknowledges support from Columbia University CIBER. † Corresponding author.
Publisher Copyright:
© CAAA
PY - 2020/9/1
Y1 - 2020/9/1
N2 - We exploit two regulatory shocks to examine the informational effects of tightening preexisting mandatory disclosure rules. Canadian National Instrument 51-101 in 2003 and the U.S. rule “Modernization of Oil and Gas Reporting” in 2009 introduced quasi-identical amendments which effectively tightened the rules governing oil and gas reserve disclosures in both countries. We document significant changes in firms' reporting outcomes when the new regulations are introduced. We also find that the reserve disclosures filed under the new regulations are more closely associated with stock price changes and with decreases in bid-ask spreads. Our findings are robust to controlling for other confounding factors such as time trends, other information disclosed simultaneously, financial reporting incentives, mispricing, and monitoring efforts.
AB - We exploit two regulatory shocks to examine the informational effects of tightening preexisting mandatory disclosure rules. Canadian National Instrument 51-101 in 2003 and the U.S. rule “Modernization of Oil and Gas Reporting” in 2009 introduced quasi-identical amendments which effectively tightened the rules governing oil and gas reserve disclosures in both countries. We document significant changes in firms' reporting outcomes when the new regulations are introduced. We also find that the reserve disclosures filed under the new regulations are more closely associated with stock price changes and with decreases in bid-ask spreads. Our findings are robust to controlling for other confounding factors such as time trends, other information disclosed simultaneously, financial reporting incentives, mispricing, and monitoring efforts.
KW - 512 Business and Management
UR - http://www.scopus.com/inward/record.url?scp=85091446059&partnerID=8YFLogxK
U2 - 10.1111/1911-3846.12572
DO - 10.1111/1911-3846.12572
M3 - Article
AN - SCOPUS:85091446059
SN - 0823-9150
VL - 37
SP - 1720
EP - 1755
JO - Contemporary Accounting Research
JF - Contemporary Accounting Research
IS - 3
ER -