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Title: A quantitative and qualitative analysis of voluntary oil and gas reserve reporting in the UK
Author: McChlery, Stuart
ISNI:       0000 0004 2688 9194
Awarding Body: Glasgow Caledonian University
Current Institution: Glasgow Caledonian University
Date of Award: 2010
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Reporting to stakeholders within the extractive industries environ provides the fmancial reporting community with one of its greatest challenges. The recent high profile cases of oil and gas reserve quantum overstatements have focused attention on this metric within the Annual Report. Standard setters dabbled briefly with reserve recognition accounting before settling for a more conservative form of supplementary reporting with the International Accounting Standards Board presently deliberating on such disclosure. Reserve quantum is seen as being both value relevant to stakeholders and a surrogate for historic and fair value accounting, criticised for their limitations within the unique context of the oil and gas sector. This thesis seeks to recognise the status of reserve quantum disclosure within the UK both in a quantitative and narrative nature to highlight current practice, weaknesses and best practice. It seeks to understand the key variables providing catalysts for disclosure, whilst also informing of other variables which might have been expected to influence disclosure but which do not. The study uses the industry's Statement of Recommended Practice and the Operational Financial Review as a benchmark regarding their oil and gas quantum directives. Both statements are voluntary in nature allowing the thesis to add to knowledge in the area of voluntary disclosure, in a sector never previously considered, in addition to the reserve disclosure per se. The thesis considers in tum the quantitative disclosure of the reserves, the reporting of narratives supplementing the reserves and the consistency of the reserves quantum and the related narratives as regards impression management. Agency theory is applied as a theoretical construct through which to analyse the reporting although related theories are also considered such as stakeholder and legitimacy theories. A predominantly positivistic research stance is taken although subjectivist approaches are also considered regarding industry case studies relating to reserve overstatements. Content analysis utilising a form of hierarchical structure is applied to UK company reports and numerous empirical tests run on the data. The research methodology is informed by extant literature, whilst the findings are contrasted with previous studiesThe results allow for a better understanding of the reporting behaviour of companies with resultant implications for accounting practice and standard setting agencies. Reporting of both quantum and narrative are found to be disparate and skewed towards poor reporting. A level of impression management towards positive reporting is found. Several key variables are seen to be catalysts to disclosure: stage of production (quantum and narrative), quality of external audit (quantum) and size of company (narrative). A number of variables expected to be surrogate agency instruments influencing reporting are seen to have no such effect, most notably corporate governance mechanisms. The low levels of disclosure are aligned to a balancing of agency costs and benefits. A minority of companies report to a high standard linked potentially to legitimacy behaviour. Information aSYITIII.letry is seen to prevail within the industry in tandem to a lack of validation of any information reported. The thesis adds to understanding the reporting practice of the oil and gas industry regarding reserve quantum and supplementary narratives but also adds to knowledge regarding narrative reporting, voluntary disclosure and impression management within Annual Reports. Keywords: oil and gas industry; reserve quantum; narrative reporting; non-mandatory reporting; corporate governance; content analysis; regression modelling; impression management; agency theory
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available