The Accounting Review Vol. 96 No. 5 2021
Disclosure Regulation and Competitive Interactions: Evidence from the Oil and Gas Industry
Abstract
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.
- DOI
- 10.2308/tar-2018-0436
- Volume
- 96
- Issue
- 5
- Pages
- 1-29
- Language
- en
- Sources
- openalex bibtex:phds-export.bib crossref