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Discussion Paper Details

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Title: The Informational Effects of Tightening Oil and Gas Disclosure Rules

Author(s): Marc Badia, Miguel Duro, Bjorn N. Jorgensen and Gaizka Ormazabal

Publication Date: March 2018

Keyword(s): Disclosure of Oil, Disclosure Rules and Gas Reserves

Programme Area(s): Financial Economics

Abstract: We exploit two regulatory shocks to examine the informational effects of tightening pre-existing mandatory disclosure rules. Canadian Rule NI 51-101 and the US "Modernization of Oil and Gas Reporting" introduced a quasi-identical tightening of the rules governing oil and gas reserve disclosures in Canada and the US at different times. Both in Canada and the US, we document significant changes in firms' reporting outcomes when the new regulation is introduced. We also find that the reserve disclosures filed under the new regulations are more closely associated with stock price changes and with decreases in bid-ask spreads. Our findings are robust to controlling for other confounding factors such as time trends, other information disclosed simultaneously, financial reporting incentives, mispricing and monitoring efforts.

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Bibliographic Reference

Badia, M, Duro, M, Jorgensen, B and Ormazabal, G. 2018. 'The Informational Effects of Tightening Oil and Gas Disclosure Rules'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=12776