Value relevance of the components of oil and gas reserve quantity change disclosures of upstream oil and gas companies in the london stock exchange

Tega Anighoro

Papers from arXiv.org

Abstract: The high level of risk and uncertainty in harnessing oil and gas reserves poses an accounting dilemma in the reporting of reserves quantity information; information which is critical and relied on by investors for decision making. Different studies have indicated that reserves disclosure information is fundamental to understanding the value of the firm. This study attempts to contribute to the growing value relevance literature on reserves disclosures by examining the value relevance of the components of oil and gas reserve quantity change disclosures of upstream oil and gas companies in the London Stock Exchange. Particularly, it investigates the relationship between average historical share returns and changes in reserves from explorations, acquisitions, production, revisions and sale. It also examines the value relevance of the quality of these disclosures. Using archival data from LSE, databases and annual reports, and applying a multifactor framework, the empirical results suggested that changes in reserves as well as the components of these changes where associated with share returns though insignificantly due to the significant impact of oil price and longitudinal effect posed by applying the measurement approach with utilizes historical returns. However, the quality of reserves disclosures has a positively significant relationship with share returns. The volatility and decline in oil price is also reflected in both low average share returns at -0.4% and low average growth in reserves at 8.94% for the last 8 years in the sector.

Date: 2020-05
New Economics Papers: this item is included in nep-ene
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://arxiv.org/pdf/2005.14659 Latest version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2005.14659

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().