 Vertical integration and value-relevance: Empirical evidence from oil and gas producersCogent Economics & Finance, 2016, vol. 4, issue 1, 1264107 Abstract: Oil and gas exploration companies (E&Ps) exhibit large variations in earnings due to volatile oil and gas prices. Furthermore, their primary asset, oil and gas reserves, is accumulated through highly risky exploration activities. In contrast, integrated oil and gas companies display lower variability in their earnings due a more diversified asset base. The literature suggests that companies with higher earnings volatility and higher levels of intangibles among their assets should have lower value relevance of accounting information than companies with higher levels of tangible assets on their balance sheets. For that reason, E&P companies should have lower value relevance than integrated companies. Contrary to expectations, we do not find lower value relevance for E&Ps earnings than integrated oil and gas companies. In fact, the results suggest that the presence of supplementary estimates for oil and gas reserves values mitigate the potential problem associated with the presence of intangible assets experienced in other industries. Date: 2016 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:oaefxx:v:4:y:2016:i:1:p:1264107 Ordering information: This journal article can be ordered from DOI: 10.1080/23322039.2016.1264107 Access Statistics for this article Cogent Economics & Finance is currently edited by Steve Cook, Caroline Elliott, David McMillan, Duncan Watson and Xibin Zhang More articles in Cogent Economics & Finance from Taylor & Francis Journals |
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