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The Informational Effects of Tightening Oil and Gas Disclosure Rules

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Listed:
  • Marc Badia
  • Miguel Duro
  • Bjorn N. Jorgensen
  • Gaizka Ormazabal
  • Hans B. Christensen

Abstract

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. Effets informationnels du renforcement des règles relatives à la divulgation d’information sur les activités pétrolières et gazières Nous nous attardons à deux chocs réglementaires pour examiner les effets informationnels du renforcement des règles de divulgation d’information obligatoire déjà en place. Le Règlement 51‐101 adopté au Canada en 2003 et le règlement « Modernization of Oil and Gas Reporting » adopté aux États‐Unis en 2009 ont introduit des modifications quasi identiques qui renforçaient de façon efficace les règles régissant la divulgation d'information relative aux réserves de pétrole et de gaz dans chacun de ces pays. Nous faisons état de changements significatifs sur le plan de la divulgation des résultats par les sociétés à la suite de l’adoption de ces règlements. Nous établissons également que le dépôt d’information sur les réserves de pétrole et de gaz en vertu des nouveaux règlements est plus étroitement associé à des variations du cours de l’action et à une réduction des écarts entre les cours acheteurs et vendeurs. Nos solides conclusions prennent en compte les autres facteurs confusionnels comme les tendances observées au fil du temps, les autres données divulguées simultanément, les incitatifs à la communication de l’information financière, les erreurs d’évaluation et les activités de surveillance.

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  • Marc Badia & Miguel Duro & Bjorn N. Jorgensen & Gaizka Ormazabal & Hans B. Christensen, 2020. "The Informational Effects of Tightening Oil and Gas Disclosure Rules," Contemporary Accounting Research, John Wiley & Sons, vol. 37(3), pages 1720-1755, September.
    • Handle: RePEc:wly:coacre:v:37:y:2020:i:3:p:1720-1755
    DOI: 10.1111/1911-3846.12572
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    1. Marc Badia & Miguel Duro & Bjorn N. Jorgensen & Gaizka Ormazabal & Hans B. Christensen, 2020. "The Informational Effects of Tightening Oil and Gas Disclosure Rules," Contemporary Accounting Research, John Wiley & Sons, vol. 37(3), pages 1720-1755, September.
    2. Ormazabal, Gaizka & Badia, Marc & Duro, Miguel & Jorgensen, Bjorn N., 2017. "Market-wide Effects of Off-Balance Sheet Disclosures:," CEPR Discussion Papers 12152, C.E.P.R. Discussion Papers.

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    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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