Empirical investigation of the information content of the disclosure on the value of oil and gas reserves

Thesis/Dissertation · Fri Jan 01 04:00:00 EST 1982

OSTI ID:6501771

Mohammadzadeh-Novin, A

In August, 1978, the Securities and Exchange Commission issued ASR 253, which required publicly owned oil and gas companies to include in their annual 10-K reports supplemental data on the present value of net future revenues from production of their proven oil and gas reserves. The SEC argued that the new disclosure would be very useful to investors and other users in evaluating the operating results, financial position, and future cash flows of oil and gas companies. This study investigated the usefulness of the new disclosure for financial-statement users in making economic decisions. The research methodology used the efficient-capital-market hypothesis. The usefulness of information for users, particularly investors in the capital market, is measured by the ability of the information to generate unexpected adjustments on stock prices of companies reporting the information. The adjustments on stock prices, if any, should be observed in the days surrounding the official release of the information to the public. The study sample included 46 oil and gas companies. These companies for the first time reported the new disclosure separately in their amendments to the 10-K reports in 1979. The behavior of the stock prices of 46 companies was examined on the days surrounding their first report of the new disclosure. According to the results, the public release of the new disclosure did not have sufficient impact on the stock prices to attain statistical significance. This finding implies that the pricing decisions of the investors in the capital market were not influenced by the reported disclosures on the value of reserves of oil and gas companies.

• OSTI ID: 6501771
• Country of Publication: United States
• Language: English

Related Subjects

02 PETROLEUM
020100 -- Petroleum-- Reserves-- (-1989)
03 NATURAL GAS
030100 -- Natural Gas-- Reserves-- (-1989)
29 ENERGY PLANNING, POLICY, AND ECONOMY
294002* -- Energy Planning & Policy-- Petroleum
294003 -- Energy Planning & Policy-- Natural Gas
ECONOMIC IMPACT
EVALUATION
INDUSTRY
INFORMATION
NATURAL GAS INDUSTRY
PETROLEUM INDUSTRY
RESERVES
RESOURCES