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To What Extent do United Kingdom Companies Provide Oil and Gas Reserves Information Sufficient to Satisfy Statement of Recommended Practice Requirements?

To What Extent do United Kingdom Companies Provide Oil and Gas Reserves Information Sufficient to... The uncertainty surrounding oil and gas reserves estimation and the cost of gathering reserves data discourage firms from disclosing sufficient data to satisfy SORP (statement of recommended practice) requirements, especially where oil and gas reserves disclosure is discretionary. However, the need to reduce agency cost and signal to stakeholders induces firms to disclose oil and gas reserves. The contrasting views on the rationale guiding the extent of disclosure were examined in this study. A sample was drawn from 83 United Kingdom (UK) oil and gas exploration and production companies listed on the London Stock Exchange. Appropriate statistical tools were used to investigate the extent of oil and gas reserves disclosure. The findings provide mixed results about the extent of disclosure to meet SORP's requirements. There was no particular evidence that UK oil and gas companies provide qualitatively acceptable oil and gas reserves quantity information. The observed varying degrees of disclosure in the market could be attributed to a discretionary regime that allows firms to determine how and when to disclose. Policy makers and industry regulators could find the results useful in assessing the current extent of disclosure compliance. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Australian Accounting Review Wiley

To What Extent do United Kingdom Companies Provide Oil and Gas Reserves Information Sufficient to Satisfy Statement of Recommended Practice Requirements?

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Publisher
Wiley
Copyright
Copyright © 2016 CPA Australia Ltd (CPA Australia)
ISSN
1035-6908
eISSN
1835-2561
DOI
10.1111/auar.12082
Publisher site
See Article on Publisher Site

Abstract

The uncertainty surrounding oil and gas reserves estimation and the cost of gathering reserves data discourage firms from disclosing sufficient data to satisfy SORP (statement of recommended practice) requirements, especially where oil and gas reserves disclosure is discretionary. However, the need to reduce agency cost and signal to stakeholders induces firms to disclose oil and gas reserves. The contrasting views on the rationale guiding the extent of disclosure were examined in this study. A sample was drawn from 83 United Kingdom (UK) oil and gas exploration and production companies listed on the London Stock Exchange. Appropriate statistical tools were used to investigate the extent of oil and gas reserves disclosure. The findings provide mixed results about the extent of disclosure to meet SORP's requirements. There was no particular evidence that UK oil and gas companies provide qualitatively acceptable oil and gas reserves quantity information. The observed varying degrees of disclosure in the market could be attributed to a discretionary regime that allows firms to determine how and when to disclose. Policy makers and industry regulators could find the results useful in assessing the current extent of disclosure compliance.

Journal

Australian Accounting Review – Wiley

Published: Mar 1, 2016

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