Revisiting the reportedly weak value relevance of oil and gas asset present values: The roles of measurement error, model misspecification, and time-period idiosyncrasy

• 成果类型: Article
• 署名作者: Boone, JP
• 署名单位: Mississippi State University
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr.2002.77.1.73
• 发表日期: 2002
• 页码: 73-106
• 关键词: fair value disclosures; valuation; banks; revaluations; CHOICE

摘要

This paper investigates three potential explanations for the puzzlingly weak value relevance of oil and gas asset present values documented in prior research: measurement error, model misspecification, and time-period idiosyncrasy. I operationally define the magnitude of measurement error as the measurement error variance, estimated using an errors-in-variables two-stage regression model similar to that used by Barth (1991) and Choi et al. (1997). I find that (1) measurement error in the present value measure of oil and gas assets is on average less than the measurement error in the historical cost asset measure; (2) oil and gas assets measured at present value explain significantly more across-firm and across-time variation in stock prices than do oil and gas assets measured at historical cost; and (3) model misspecification partially accounts for the puzzlingly weak reported value relevance of the present value measure in prior research.