The Usefulness of Full Cost and Successful Efforts Accounting Methods for Forecasting Earnings Per Share in The Oil and Gas Industry  

Oleh:

Suwardjono

Jenis: Article from Journal - ilmiah nasional - tidak terakreditasi DIKTI
Dalam koleksi: International Journal of Business vol. 4 no. 1 (Jan. 2002), page 91-116.
Topik: OIL AND GAS; analyst forecasts; earning forecasting; full cost; mechanical models; oil and gas industry; successful efforts

Ketersediaan

Perpustakaan Pusat (Semanggi) Nomor Panggil: II51.1 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Isi artikel

This paper investigates whether ful cost (FC) and successful efforts (SE) accounting methods differ in their ability to provide earnings informaiton to users through the use of quarterly forecasts of earnings per share (EPS). Specifically, this study compares the accuracy of financial analysts and mechanical models in forecasting quarterly EPS's. This paper also examines whether the superiority of analyst forecasts over the mechanical forecasts found in previous studies is relevant and consistent in the oil and gas industry with respect to the accounting choice. Using quarterly actual and forecasted EPS's data from 1991 through 1993 from the institutional brokers estimates systems (IBES) database, this study finds that forecasts by analysts for FC firms are in general more accurate than forecasts for SE firms by any measure of errors for one quarter through four - quarter ahead forecast horizons. This finding implies that the recommendation to abolish the FC method to account for exploration costs in the oil and gas industry may be inappropriate in terms of its usefulness to provide information to the market.

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