The Informational Effects of Tightening Oil and Gas Disclosure Rules

57 Pages Posted: 11 Apr 2017 Last revised: 3 Aug 2018

See all articles by Marc Badia

Marc Badia

IESE Business School

Miguel Duro

IESE Business School

Bjorn Jorgensen

London School of Economics & Political Science (LSE) - Department of Accounting and Finance

Gaizka Ormazabal

University of Navarra, IESE Business School

Multiple version iconThere are 2 versions of this paper

Date Written: July 15, 2018

Abstract

We exploit two regulatory shocks to examine the informational effects of tightening pre-existing mandatory disclosure rules. Canadian National Instrument 51-101 in 2003 and the United States 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.

Keywords: disclosure rules, disclosure of oil and gas reserves, bright-line rules, off-balance sheet disclosure.

JEL Classification: M41

Suggested Citation

Badia, Marc and Duro, Miguel and Jorgensen, Bjorn N and Ormazabal, Gaizka, The Informational Effects of Tightening Oil and Gas Disclosure Rules (July 15, 2018). Contemporary Accounting Research, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2949896 or http://dx.doi.org/10.2139/ssrn.2949896

Marc Badia

IESE Business School ( email )

Avenida Pearson 21
Barcelona, 08034
Spain
+34 932534200 (Phone)

Miguel Duro

IESE Business School ( email )

Avenida Pearson 21
Barcelona, 08034
Spain

Bjorn N Jorgensen (Contact Author)

London School of Economics & Political Science (LSE) - Department of Accounting and Finance ( email )

Department of Accounting Room, OLD 2.17
Houghton Street
London, WC2A 2AE
United Kingdom

HOME PAGE: http://www.lse.ac.uk/accounting/people/bjorn-jorgensen

Gaizka Ormazabal

University of Navarra, IESE Business School ( email )

Avenida Pearson 21
Barcelona, 08034
Spain

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