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The Value Relevance of Oil and Gas Disclosures: An Assessment of the Market's Perception of Firms' Effort and Ability to Discover Reserves
Author(s) -
Berry Kevin T.,
Wright Charlotte J.
Publication year - 2001
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/1468-5957.00392
Subject(s) - relevance (law) , value (mathematics) , perception , market value , business , economics , marketing , financial economics , accounting , psychology , neuroscience , machine learning , political science , computer science , law
The purpose of this study is to determine whether supplemental reserve disclosures contain value‐relevant information by examining the extent to which they convey information regarding firms' effort and ability to discover reserves. Using Ohlson's (1995) model as a framework, two hypotheses were developed and tested. The empirical results indicate that both effort and ability to discover reserves are significant in explaining the market value of full cost firms. However, only effort is significant (marginally) in explaining the market value of successful efforts firms.