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Wilfrid Laurier University Leaf
November 28, 2014

Canadian Excellence Leaf

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Events



School of Business & Economics

CPA/Laurier Centre Speaker Series

Recognition & Valuation Relevance of Asset Retired Obligations by Cdn. Natural Resource Companies
May 9/14

Date: May 9/14
Time: 10:30 - 12:00
Location: SBE1220, Schlegel Building
Cost: n/a

You are invited to attend the CPA/Laurier Center workshop given by Tom Schneider from University of Alberta.

When: 10:30am - 12:00pm, Friday, May 9
Where: SBE 1220
Paper title: Recognition and Valuation Relevance of Asset Retired Obligations by Canadian Natural Resource Companies

Abstract:
The Accounting Standards Board of the Canadian Institute of Chartered Accountants (CICA) promulgated a new accounting standard for fiscal years beginning on or after January 1, 2004, requiring entities,including natural resource companies, to recognize the fair value of their liability for asset retirement obligations (ARO) in the period that the liability is incurred. This study investigates the valuation impact of adoption of the new standard by Canadian natural resource companies and explores investors' reactions to AROs. We find that (a) explicit recognition of AROs improves the market valuation of resource companies, especially for firms that did not voluntarily disclose desired ARO related information in the notes to their financial statements under the previous accounting standard, and (b)investors reacted differently to changes in the ARO for firms that did not make desired voluntary disclosures about total future site reclamation and restoration costs under the old accounting standard (vs. firms that made such disclosures). The findings have important implications for environmental accounting research and accounting standard setters.

Contact: Karen Cleaver
Email: kcleaver@wlu.ca
Phone: 2059

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