Stock Exchange Listing Rules and Disclosure of Reserves in the Extractive Industries

Managers of oil and gas and mining firms face a trade-off when disclosing quantum of reserves in the annual reports. The disclosure is likely to reduce the firm's cost of equity and debt. On the other hand, information about the firm’s reserves is likely to attract competitors' attention. Therefore, managers aim to achieve an optimum level of disclosure in the firms' annual reports. This study examines the impact of a change in Australian Stock Exchange listing rules regarding disclosure of reserves. The change in the rules does not seem to have much effect on the frequency of disclosure. Instead, the disclosure is influenced by firm's size, auditor quality, stage of growth, project financing, and reserves' measurement costs. Earlier studies focused on disclosure of reserves by firms in the oil and gas industry. This study extends the previous work by focusing on oil and gas firms as well as mining firms.