The market reaction to the reserve-based value replacement measures of oil and gas producers

Article Abstract:

The information content of supplemental reserve disclosure as required in Statement of Financial Accounting Standards No. 69: Disclosures About O and G Producing Activities is investigated. The explanatory power of three reserve-based value measures are analyzed. Results show that the net annual change in reserve value is not linked to unexpected security returns during the release week of the annual report of oil and gas producers. Market participants are also found to react positively to companies that replace their reserve base through discoveries.

Natural Gas Distribution, PETROLEUM AND COAL PRODUCTS, Petroleum, Petroleum and Coal Products Manufacturing, Gas Production and Distribution, Gas, Commercial Use, Petroleum reserves, Commercial buildings, Natural gas, Gas utilization, Natural gas reserves

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Revisiting the conditions for fully revealing disclosure

Article Abstract:

A study on the conditions required for the application of the fully revealing income disclosure model is evaluated. It is argued that an invertibility condition is essential to convey information using cash flows and income reports amidst restrictions in income calculation. It is also shown that underlying information can be revealed when a one-to-one relationship exists between the continuing expected value calculation and underlying information.

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Additional thoughts on conditions for fully revealing disclosure

Article Abstract:

The fully revealing income disclosure model (FRIDM) is analyzed. The application of the FRISM requires compliance with two conditions, namely, the invertibility condition of Demski and Sappington (1990) and the differences/transparency conditions of Vickerey (1992). However, it is argued that compliance with the invertibility condition is unnecessary for fully revealing disclosure.

Valuation

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