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

Pinsker, Robert E.; Pitre, Terence J.; Daigle, Ronald J.

doi:10.1016/j.jaccpubpol.2009.07.005

Cited by 8 publications

(1 citation statement)

References 49 publications

(50 reference statements)

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“…Although much of this research has contributed to our understanding of materiality, Messier et al (2005) conclude that many questions still remain, and identify a number of areas where future research should proceed. These include more research on planning materiality (Chen et al, 2008, Blokdijk et al, 2003, evaluation of materiality decisions (Pinsker et al, 2009), materiality of internal control deficiencies (Chandra and Calderon, 2008) and materiality in attest engagements (DeZoort et al, 2003).…”

Section: Literature Reviewmentioning

confidence: 99%

Materiality in the context of audit: the real expectations gap

Houghton

Jubb

Kend

2011

Managerial Auditing Journal

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Purpose -This paper seeks to focus on the issue of materiality judgements and the need for public disclosure of materiality levels. Insights about the concept of materiality are drawn from the words of users of audited financial reports, auditee managements, suppliers to the market for audit services and auditing standard setters and regulators. Design/methodology/approach -This paper reports findings arising from face-to-face office interviews with individuals representing identified groups of stakeholders in the market for audit services about the issue of "materiality" as this concept is applied in auditing. The interviews canvassed many issues related to audit as part of a larger project entitled "The future of audit". Findings -In general, stakeholders perceive that the concepts involved in audit materiality are not well understood and they point to the difficulty in providing educative materiality about it, especially in relation to qualitative materiality, to retail investors in particular. There are mixed views as to whether the actual level of tolerable error, as per one of the meanings of materiality in the audit space, should be disclosed, with some feeling that it might be detrimental or dangerous. Practical implications -If incremental information about materiality is to be disclosed, the issue of where, what to whom, by whom and when arise. Various suggestions are made by stakeholders in respect of these questions. Originality/value -The paper concludes by drawing from the insights gained by the authors through the comments of participant stakeholders to make recommendations that deal with the issue of audit materiality.

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Section: Literature Reviewmentioning

confidence: 99%

Materiality in the context of audit: the real expectations gap

Houghton

Jubb

Kend

2011

Managerial Auditing Journal

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Translating audit materiality in disclosure: Competing logics and different outcomes in Australia and New Zealand

Kend

Nguyen²

2023

Critical Perspectives on Accounting

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Firm size and the voluntary disclosure of nonfinancial information by private versus public firm managers

Karim

Pinsker

Robin

2013

Managerial Auditing Journal

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Purpose – The specific purpose of this study is to understand how firm size and public/private affiliation (employment status) affect voluntary disclosure decisions concerning quantitatively immaterial nonfinancial information. Although the prior disclosure literature is large and has considered a variety of factors including size and to a lesser degree employment status, this study offers a new perspective by considering both factors in the context of qualitative materiality. Design/methodology/approach – This paper presents 136 manager participants with 24 cues representing nonfinancial, realistic business events and solicits their disclosure judgments. The cues are adapted from Pinsker et al. and contain information that does not meet widely-accepted quantitative thresholds for disclosure (e.g. 5 percent of net income), yet were identified by the Securities and Exchange Commission (SEC) as more likely to be material. This paper uses a median split of total assets and total revenues to determine “large” and “small” firms. Managers' judgments are measured in an own-firm setting (The context is their current employer, which can be public or private.). Findings – This paper finds that disclosure is positively linked to firm size, but this paper do not find an employer status effect. Additional testing reveals that private firm managers are sensitive to SEC oversight and other external, competitive pressures, suggesting that they face mimetic pressures to behave like their public firm counterparts. In sum, their findings contribute significantly to the disclosure, strategic management, institutional theory and judgment-and-decision-making (JDM) literatures. Originality/value – Although there is a vast literature on public firm managers' voluntary disclosure behavior (mostly involving large firms), there is little research regarding the voluntary disclosure behavior of small or large private firm managers involving nonfinancial information.

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

Cited by 8 publications

References 49 publications

Materiality in the context of audit: the real expectations gap

Materiality in the context of audit: the real expectations gap

Translating audit materiality in disclosure: Competing logics and different outcomes in Australia and New Zealand

Firm size and the voluntary disclosure of nonfinancial information by private versus public firm managers

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