Revisions of international firms' energy reserves and the reaction of the stock market

Bert Scholtens; Robert Wagenaar

doi:10.1016/j.energy.2011.03.060

Revisions of international firms' energy reserves and the reaction of the stock market

Bert Scholtens^*, Robert Wagenaar

^*Corresponding author for this work

Centre for Responsible Banking and Finance

Research output: Contribution to journal › Article › peer-review

Abstract

Energy companies can adjust the estimation of their reserves. We investigate how these revisions impact on the value of these firms. We analyze 100 revisions in seventeen countries for the period 2000-2010. We use an event study and find that the revisions of energy reserves significantly impact on the market value of the firm. We also discover an asymmetry in this response as the market's reaction to downward revisions is much larger than that to upward revisions. Furthermore, the response to revisions in Australia, Canada, UK and US is smaller than that in the other 13 countries and the response is smaller in the years with turmoil on the energy markets.

Original language	English
Pages (from-to)	3541-3546
Number of pages	6
Journal	Energy
Volume	36
Issue number	5
DOIs	https://doi.org/10.1016/j.energy.2011.03.060
Publication status	Published - May 2011

Keywords

Energy companies
Event study
Reserve revisions

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10.1016/j.energy.2011.03.060

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abstract = "Energy companies can adjust the estimation of their reserves. We investigate how these revisions impact on the value of these firms. We analyze 100 revisions in seventeen countries for the period 2000-2010. We use an event study and find that the revisions of energy reserves significantly impact on the market value of the firm. We also discover an asymmetry in this response as the market's reaction to downward revisions is much larger than that to upward revisions. Furthermore, the response to revisions in Australia, Canada, UK and US is smaller than that in the other 13 countries and the response is smaller in the years with turmoil on the energy markets.",

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AB - Energy companies can adjust the estimation of their reserves. We investigate how these revisions impact on the value of these firms. We analyze 100 revisions in seventeen countries for the period 2000-2010. We use an event study and find that the revisions of energy reserves significantly impact on the market value of the firm. We also discover an asymmetry in this response as the market's reaction to downward revisions is much larger than that to upward revisions. Furthermore, the response to revisions in Australia, Canada, UK and US is smaller than that in the other 13 countries and the response is smaller in the years with turmoil on the energy markets.

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Revisions of international firms' energy reserves and the reaction of the stock market

Abstract

Keywords

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