Accounting and Control

The Informational Effects of Tightening Oil and Gas Disclosure Rules

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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.
Bibliographic citation: BADIA, M., DURO, M., JORGENSEN, B. N., ORMAZABAL, G. (2020). The Informational Effects of Tightening Oil and Gas Disclosure Rules. Contemporary Accounting Research, 37 (3), 1720-1755. doi:10.1111/1911-3846.12572.

Reference: 10.1111/1911-3846.12572 (DOI)
Date: 01/09/2020
Author(s): Marc Badia; Miguel Duro; Bjorn N. Jorgensen; Gaizka Ormazabal
Document type: Article in Journal (refereed)
Department: Accounting and Control
Sector: Gas; Gas
Languages: English
Geographic area: USA / Canada