Market Reaction to Unilateral Release of Extractive Issuers’ Payments by United States Department of the Interior

Notwithstanding significant contributions of Extractive Industries Transparency Initiate (EITI) to resource-rich countries accountability and transparency, the question of how information content by extractives firms' payments affect companies remains unanswered. We examine stock market reaction to premiere unilateral release of natural resources revenue payments by United States Department of the of Interior (DOI) in pursuance of U.S. Extractive Industries Transparency Initiative candidacy implementation process. This innovative disclosure relate to firms' specific non-tax payments data received by the Office of Natural Resources Revenue (ONRR) for 2013 calendar year. Using the two factor event study model incorporating oil and gas industry index we find average positive cumulative abnormal return during event period following the unilateral release of this financial information. The result show that the market reacts positively to new information as part of appropriate corporate disclosure, in addition it offers investors' opportunity to evaluate firm's future flow of revenue associated with natural resources exploration and project engagements. The result confirm previous studies' prediction on information content and announcements, however, it goes further to show that information content with additional processed details and usability help market participants in making informed valuation judgement about extractive issuers