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SEC Listed vs. Non-listed Events: Potential Trading Behavior Differences Using Non-professional Investors
Robert Pinsker,
Old Dominion University
Terence Pitre, University of South Carolina
Ronald Daigle, Sam Houston State University
ABSTRACT. In response to suggestions for more interpretive materiality guidance, the SEC deviated from its longstanding policy of not providing guidance related to materiality, and listed specific events it deemed as potentially material. Additionally, SOX Section 409 significantly decreases the time management has to disclose material events. We examine whether investor trading behavior differs between SEC listed events and non-listed events. Our results indicate investors’ trading behavior does not differ between listed and non-listed events in the aggregate. Also, we find that subsequent disclosures increase the investors’ pre-disclosure knowledge base resulting in an increase in homogeneity of investors beliefs at the end of a sequence of disclosures relative to the beginning of the sequence. The findings suggest potentially lower stock price volatility due to Section 409 and that there are additional events that the SEC does no
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