EMPIRICAL EVALUATION OF THE VALUES OF ACCOUNTING ALTERNATIVES IN THE OIL AND GAS INDUSTRY IN THE CONTEXT OF RISK ASSESSMENT.

摘要

The Financial Accounting Standards Board (FASB) primarily justified its policy decision on Statement 19 by ascertaining that the Successful Efforts (SE) method highlights the risks and failure underlying oil and gas exploration and production activities, while the Full Costing (FC) method obscures them. To examine this issue, this dissertation formulates the following hypothesis in the null form: Accounting information generated by the FC and SE methods explains the stock market risk of oil and gas producing companies equally well.;The results indicate that the SE method is better than the FC method in explaining systematic risk. This finding supports the FASB's justification for Statement 19 in the context of risk assessment. Finally, the evidence in this study implies that, given an efficient market, relative to the FC counterpart, the accounting information generated by the SE method is more consistent with the information set used by the market in the context of risk assessment.;Two measures of systematic risk are used as the criterion variable (dependent variable): (1) the ordinary least squares estimated of beta; and (2) the Bayesian adjusted estimate of beta. A model is developed which links systematic risk with firm-specific variables, including real economic variables and accounting-based variables. The hypothesis is tested in the context of the developed model. The dissertation employs four different test designs to measure the explanatory power of the accounting-based variables (taken as a whole) in the model.