Detalle Publicación


Disclosure regulation and competitive interactions: Evidence from the oil and gas industry

Autores: Badía Castellà, Marc; Duro, M.; Jorgensen, B. N.; Ormazabal Sanchez, Gaizka
Título de la revista: ACCOUNTING REVIEW
ISSN: 0001-4826
Volumen: 96
Número: 5
Páginas: 1 - 29
Fecha de publicación: 2021
We study the effects of mandatory disclosure on competitive interactions in the setting of oil and gas (O&G) reserve disclosures by North American public firms. We document that reserve disclosures inform competitors: when one firm announces larger increases in O&G reserves, competitors experience lower announcement returns and higher real investments. To sharpen identification, we analyze several sources of cross-sectional variation in these patterns, the degree of competition, and the sign and the source of reserves changes. We also exploit two plausibly exogenous shocks: the tightening of the O&G reserve disclosure rules and the introduction of fracking technology. Additional tests more directly focused on the presence of proprietary costs confirm that the mandated reserve disclosures result in a relative loss of competitive edge for announcing firms. Our collective evidence highlights important trade-offs in the market-wide effects of disclosure regulation.