The Informational Effects of Tightening Oil and Gas Disclosure Rules

61 Pages Posted: 13 Mar 2018

See all articles by Marc Badia

Marc Badia

IESE Business School

Miguel Duro

IESE Business School; European Corporate Governance Institute (ECGI)

Bjorn Jorgensen

Gaizka Ormazabal

University of Navarra, IESE Business School; European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 3 versions of this paper

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

Badia, Marc and Duro, Miguel and Jorgensen, Bjorn N and Ormazabal, Gaizka, The Informational Effects of Tightening Oil and Gas Disclosure Rules (March 2018). CEPR Discussion Paper No. DP12776, Available at SSRN: https://ssrn.com/abstract=3138838

Marc Badia (Contact Author)

IESE Business School ( email )

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

Miguel Duro

IESE Business School ( email )

Avenida Pearson 21
Barcelona, 08034
Spain

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Gaizka Ormazabal

University of Navarra, IESE Business School ( email )

Avenida Pearson 21
Barcelona, 08034
Spain

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

No contact information is available for Bjorn N Jorgensen

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