The Market Implications of Earnings and Reserve Surprises
M Costabile, SL Soltys, NA Spear
Petroleum Accounting and Financial Management Journal | Institute of Petroleum Accounting | Published : 2012
Using a sample from the 1993-2007 period, we provide evidence consistent with a market premium for firms that report a positive reserve quantity revision. After controlling for the information contained in the earnings surprise, we find that the average return for firms that report a positive reserve quantity revision is 7.7% higher than firms that fail to do so. The average return for firms that report both a positive earnings surprise and a positive reserve revision is 15.3% higher than other firms.