The Informational Effects of Tightening Oil and Gas Disclosure Rules
61 Pages Posted: 13 Mar 2018
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The Informational Effects of Tightening Oil and Gas Disclosure Rules
The Informational Effects of Tightening Oil and Gas Disclosure Rules
The Informational Effects of Tightening Oil and Gas Disclosure Rules
Date Written: March 2018
Abstract
We exploit two regulatory shocks to examine the informational effects of tightening pre-existing mandatory disclosure rules. Canadian Rule NI 51-101 and the US "Modernization of Oil and Gas Reporting" introduced a quasi-identical tightening of the rules governing oil and gas reserve disclosures in Canada and the US at different times. Both in Canada and the US, we document significant changes in firms' reporting outcomes when the new regulation is 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 of Oil, Disclosure Rules, Gas Reserves
JEL Classification: M41
Suggested Citation: Suggested Citation