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What is the economic value of the Extractive Industries Transparency Initiative (EITI) information disclosure?

Author

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  • Moses, Olayinka
  • Houqe, Muhammad Nurul
  • van Zijl, Tony

Abstract

We use the United States Extractive Industries Transparency Initiative (EITI) unilateral release of information on non-tax payments by extractive companies to the US Government as an illustration of the economic value of EITI information. We test for market reaction to the initial disclosure of this information in terms of change in trading volume and abnormal returns, and the value relevance of the continuing disclosure of the information over 2013–2016 period. The results show that the initial release resulted in a significant trading volume reaction and produced positive cumulative abnormal return in the period immediately surrounding the release date. Regression analyses of the cross-sectional variation in abnormal returns show that the reaction is associated with oil and gas firms with high working capital and lower asset turnover. Furthermore, we find that the USEITI information released over the period to 2016 is (at least) weakly value relevant.

Suggested Citation

  • Moses, Olayinka & Houqe, Muhammad Nurul & van Zijl, Tony, 2018. "What is the economic value of the Extractive Industries Transparency Initiative (EITI) information disclosure?," Journal of Contemporary Accounting and Economics, Elsevier, vol. 14(2), pages 216-233.
    • Handle: RePEc:eee:jocaae:v:14:y:2018:i:2:p:216-233
    DOI: 10.1016/j.jcae.2018.05.003
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    Cited by:

    1. Sidney J. Gray & Niclas Hellman & Mariya N. Ivanova, 2019. "Extractive Industries Reporting: A Review of Accounting Challenges and the Research Literature," Abacus, Accounting Foundation, University of Sydney, vol. 55(1), pages 42-91, March.
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    3. Ali Meftah Gerged & Rami Salem & Eshani Beddewela, 2023. "How does transparency into global sustainability initiatives influence firm value? Insights from Anglo‐American countries," Business Strategy and the Environment, Wiley Blackwell, vol. 32(7), pages 4519-4547, November.

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    More about this item

    Keywords

    Extractive Industries Transparency Initiative; Market reaction; Event study; Value relevance;
    All these keywords.

    JEL classification:

    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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