The relevance of accounting and supplementary information in the valuation of global oil companies

Authors

  • João Carlos de Aguiar Domingues Faculdade de Economia, Administração e Contabilidade de Ribeirão Preto da Universidade de São Paulo (FEA-RP/USP) Av. Bandeirantes 3900 - Monte Alegre - CEP 14040-905 - Ribeirão Preto/SP (16) 3602-0210
  • Evandro Marcos Saidel Ribeiro Universidade de São Paulo, Faculdade de Economia, Administração e Contabilidade de Ribeirão Preto (FEARP - Departamento de Administração).

Abstract

This research investigated the relevance of information related to proven reserves of oil and accounting information (net income and book value) in the valuation of global oil companies. Regressions were applied considering the technique of Panel Data on a sample of 15 oil companies integrated and listed on the New York Stock Exchange (NYSE) during the period from 2001 to 2012, totaling 180 firms-year. Eight models were tested, each of them having the Naperian or natural logarithm (ln) of the average share price as dependent variable, considering the closing prices of November, December, January and February. Equity (PL), net income (LL), capitalized costs (CC), volume of gas and oil reserves (RPO&G), components of the change in reserve value, and discounted future cash flow (FCD) of the reserves were tested as independent variables. The results indicated that the market value of an oil company is a function of the PL variable and accounting information related to proven oil and gas reserves. This finding reinforces the idea that the accounting data are incomplete for determining the value of an oil company, and information related to proven oil and gas reserves contributes to increase the relevance of accounting variables measured at historical values. As a result, additional information in the notes on the oil reserves is relevant and necessary, besides traditional information already disclosed in the financial statements.

Keywords: oil and gas, value relevance, disclosure.

Author Biographies

João Carlos de Aguiar Domingues, Faculdade de Economia, Administração e Contabilidade de Ribeirão Preto da Universidade de São Paulo (FEA-RP/USP) Av. Bandeirantes 3900 - Monte Alegre - CEP 14040-905 - Ribeirão Preto/SP (16) 3602-0210

Bacharel em Administração pela Universidade Estadual Paulista “Júlio de Mesquita Filho” (UNESP - Campus de Tupã) (2007), Mestre em Ciências Contábeis (2008-2010) e Doutor em Administração de Organizações pela Faculdade de Economia, Administração e Contabilidade de Ribeirão Preto da Universidade de São Paulo (FEA-RP/USP)

Evandro Marcos Saidel Ribeiro, Universidade de São Paulo, Faculdade de Economia, Administração e Contabilidade de Ribeirão Preto (FEARP - Departamento de Administração).

Bacharel em Física (Mar89-Ago92), Mestre em Física (Mar95) e Doutor em Física (Mar99) pela Universidade Federal de São Carlos (UFSCAR).

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Published

2016-01-14

Issue

Vol. 13 No. 2 (2016): Apr/Jun

Section

Articles

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