Workshop Series: Andrew Ferguson

22 July, 2011 - 10:30 to 12:00
Room 430 Joyce Ackroyd Building (37)


This paper examines restoration and rehabilitation provisions in the Australian materials and energy sectors. The issue is interesting in light of recent moves by the Obama administration to introduce an Abandoned Mine Land fee on hard rock mining in the U.S. context. We provide evidence on a descriptive level that restoration and rehabilitation provisions are economically significant to the firm when compared with total provision, liabilities, assets and market capitalisation. Our study has two primary objectives. First, we identify the firm characteristics which influence the level of the provision. In doing so this paper contributes to the prior literature such as Barth and McNichols (1994) by developing an ‘ex-ante’ levels model of environmental provisions. Prior studies have mainly examined ‘ex-post’ regulatory enforced obligations such as superfund liabilities. Second, we examine whether the market prices the difference between the expected and recognised restoration and rehabilitation accrual and find evidence of the value relevance of under provisions.

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Andrew Ferguson, Professor, University of Technology, Sydney

Andrew Ferguson teaches Financial Accounting at UTS. His research has been published in leading journals both nationally and internationally including The Accounting Review, Contemporary Accounting Research, Pacific Basin Finance Journal, Accounting and Finance, Australian Journal of Management and Abacus. Andrew's current research interests include disclosure, governance and valuation.