Relative value relevance of the successful efforts and full cost accounting methods in the oil and gas industry

• 成果类型: Article
• 署名作者: Bryant, L
• 署名单位: University System of Ohio; Ohio State University
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1023/A:1022645521775
• 发表日期: 2003
• 页码: 5-28
• 关键词: STOCK RETURNS; book value; earnings; valuation; coefficients; INFORMATION; equity; losses; FIRMS; MODEL

摘要

This paper examines the value relevance of two alternative accounting methods for exploration and development (E&D) expenditures for oil and gas firms. I find that full cost (FC) accounting data is more value-relevant than successful efforts (SE) accounting data. Further analysis reveals that the smooth earnings provided by the FC method contributes to the higher value relevance of the FC method. This study concludes that a policy of full capitalization of expenditures with uncertain future economic benefits better summarizes information relevant to investors relative to a policy of partial capitalization.