Political costs and earnings management of oil companies during the 1990 Persian Gulf Crisis

Article Abstract:

A research was conducted to test whether oil companies that anticipated increases in earnings from immediate price hikes utilized accounting accruals to reduce their financial performance and political sensitivity during the 1990 Persian Gulf War. Petroleum refining firms received more publicity during the crisis due to the large amount of revenues they gained from the sale of consumer products, and has made them more vulnerable to political actions and antitrust investigations. Results indicated that the early disclosure of earnings data was overshadowed by the political costs related with timely releases of information. They also showed that petroleum refining firms utilized accruals to reduce reported earnings during the 1990 Persian Gulf crisis.

Petroleum Refineries, Petroleum refining, Reporting & Disclosure, Financial Management, Accounting and auditing, Petroleum industry, Political aspects, Persian Gulf War, 1991

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Unbalanced information and the interaction between information acquisition, operating activities, and voluntary disclosure

Article Abstract:

Accounting information is frequently only a partial and unbalanced representation of the fundamental economics, stressing certain aspects of the inherent operations while disregarding others, as various activities cannot be measured or communicated with the same precision. Information imbalance demonstrated by its distorting effect on operating activities implicates a reduction of propensity of managers to gain information and provide voluntary disclosures.

United States, Disclosure of information, Financial accounting, Report, Information asymmetry

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