An investigation of nonprofessional investors' qualitative materiality judgments incorporating SEC listed vs. non-listed events

When the SEC began listing specific potentially material events in its Regulation FD [Regulation Fair Disclosure, 2000. SEC Release 33-7881, Rules 101-103], it deviated from its long-time "policy" of not providing materiality guidance to auditors and managers. What is currently unclear in the materiality literature is which factor(s) - information-based characteristics or user-based characteristics - has an effect on nonprofessional investor qualitative materiality judgments. Using a series of experimental markets, we examine and find no evidence that an information-based characteristic (distinguishing between listed and non-listed events) has an effect on nonprofessional investors' materiality judgments. Our evidence regarding user-based characteristics is mixed. We do not find evidence of the direction of disclosed events impacting investors' judgments, but we do find evidence of an anchoring effect. Our findings indicate that the content of the information disclosed to nonprofessional investors is not as important as the timing of the disclosure. Our investigation is unique in that we consider the (qualitative) nature of the event, rather than simply its (quantitative) magnitude.