Oil and Middle East Politics: the case of British Petroleum (BP) and Shell in the Suez crisis

"Walker explains crisis as “times of acute disturbance which may impact at the global, national, organisational or personal level” . Historians remain interested and enthusiastic in the search for explanations for continuities and explanations for changes which occur over long periods to help in identifying major vital turning points . The Suez crisis of 1956-57 when the Egyptian leader, Colonel Gamal Abdel Nasser, nationalised the Suez Canal remains a crucial event in 20th-century business and economic history. It presented a number of interesting issues relating to UK relations with Egypt and with the USA which have been explored in previous literature - but it also had an impact on oil companies which has attracted less attention and which, we argue, deserves further exploration. This paper explores the impact of the crisis on 2 oil companies with a major British connection, BP and Shell, and draws a number of comparisons between Suez and the earlier crisis of Iran's nationalisation of BP's Iranian site. The study is of significant interest to academics and the business community alike, since historical studies offer an opportunity to consider changes in the levels of disclosures in terms of both quantity and quality through the analysis of reactions to social change and regulation. The contextualization of the development of accounting by reference to major key points and periods of crisis assist in the search for the origins of a debacle and try to arrive at conclusions which generate historical evidence. The objectives of this paper are to undertake a comparative study to examine the role of narrative accounting disclosure for two major oil companies (BP and Shell) to examine and compare the bargaining power of both companies in two important episodes (the oil nationalisation crisis in Iran in 1951 and nationalisation of the Suez Canal in 1956). These were in territories- Iran and Egypt- that were considered as of economic and strategic importance to Britain because they were integral to the post-war imperial system. The paper addresses this objective by analysing relevant narrative disclosures in major archival documents and publicly available annual reports produced by BP and Shell. Our sources are examined to explain how the company’s annual reports were used as part of a propaganda battle. We argue that crisis affects the extent and quality of disclosures made by companies in their annual reports. Its analysis theoretically informed by resource dependency theory as it particularly complements stakeholder theory in coping with the increased complexities arising from a wider stakeholder base . We hypothesize that firms (BP and Shell) with a stakeholder orientation will have high level of disclosures in their annual reports during crisis. Our study contributes to a greater understanding of observed variations in disclosures among two different oil companies (BP and Shell) to understand the differential pressures for disclosure in different periods. These differences permit us to explore differences in managerial disclosures to provide support for a stakeholder explanation for observed differences in reporting during the crisis. Our findings based on a content analysis of 1950-1958 annual reports for BP and Shell in the oil industry lend support to the stakeholder explanation for disclosure practices during crisis. In short, we argue that the annual report disclosures are being used to enhance the bargaining position of the oil companies. The paper begins by outlining the prior literature and theory development and then goes to the nature of the crisis to consider its reporting by the chosen companies, Shell and BP, in a review of their reporting in financial reports and at AGMs over the period."