NEW EVIDENCE ON SFAS NO 69 AND THE COMPONENTS OF THE CHANGE IN RESERVE VALUE

• 成果类型: Note
• 署名作者: ALCIATORE, ML
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• 发表日期: 1993
• 页码: 639-656
• 关键词: accounting research; decisions

摘要

The purpose of this article is to investigate the information content of the change in the standardized measure (CSM) disclosure reported by oil and gas producers as assessed by market participants. Previous research by Doran et al. (1988) suggests that selected components of the CSM disclosure have a modest influence on share prices. This study reexamines this issue with a more homogeneous sample of oil and gas producers (e.g., excluding Canadian firms), and investigates all ten components of the CSM that firms must currently report. It provides evidence on the usefulness of one of the major supplemental disclosures for oil and gas producers. In particular, it shows that disaggregating the change in reserve value into the required components provides additional information over reporting only the CSM, and that six components provide incremental information relative to the other components and to net income: (1) production; (2) discoveries; (3) purchases of reserves; (4) quantity revisions; (5) price changes; and (6) the change in income taxes. In the early 1980s, the Financial Accounting Standards Board (FASB) and the Securities Exchange Commission (SEC) decided that, although reserve value accounting data would not be reported in the financial statements, supplemental disclosures of reserve values and changes therein (i.e., the CSM disclosure) would be required because such information is not reflected in historical cost financial statements (see FASB 1982; SEC 1982). Thus, this study also contributes to the more general area regarding the incremental information in footnotes relative to information such as net income reported in the financial statements (e.g., see Beaver et al. 1982; Imhoff et al. 1992). Doran et al. (1988) tested for the incremental information content, relative to historical cost earnings, of three reserve value-based measures: (1) the total annual change in reserve value (less reserve purchases and sales), as well as the change in reserve value attributable to (2) discoveries and (3) revisions in price and quantity estimates. They calculated the variables using data filed under Statement of Financial Accounting Standards No. 69 (SFAS No. 69, FASB 1982) for 1982-1984 and found that only the revisions variable provided information on producers and that earnings did not. This study replicates their tests using SFAS No. 69 data over the same period with consistent results. The analyses of Doran et al. are then expanded by investigating the information content of the ten components of the change in reserve value required by SFAS No. 69. The set of information items currently required are more disaggregated than the set that was required prior to SFAS No. 69.1 The study results offer new insights and provide the first evidence that gross profits from production are positively associated with returns. In addition, the findings suggest that discoveries and purchases of reserves are negatively associated with returns during the test period. Although this appears to be counterintuitive, it is consistent with analyses of the oil and gas industry by McConnell and Muscarella (1985), Picchi (1985), and Jensen (1986a, 1986b) that the market reacted negatively to oil firms investing in exploration and development (E & D) during this time period. They describe the period as one in which oil prices were declining, and firms were spending too much on E & D, and had excessive levels of reserves. Thus, additions to reserves as measured by CSM components such as discoveries need not be positively associated with returns. In addition, there is some evidence that the tax change component reflects a tax adjustment to the values of the other components. The analysis of the CSM components is replicated using abnormal returns estimated from a market model that includes industry and market indexes. The results show that net income is positively related to abnormal returns, which indicates that earnings do provide information about firm-specific events for producers. The results also indicate that the six CSM components described above are associated with the dual-index returns.