Materiality and Data Fixation in Investment Decision Making: The Use of Accounting Change Information by Korean Financial Analysts

Materiality and Data Fixation in Investment Decision Making: The Use of Accounting Change Information by Korean Financial Analysts

While several studies have investigated data fixation in an accounting change, most studies do not answer why fixated behaviors have existed. This study attempts to provide an answer by examining the materiality effects of an accounting change on fixation on the basis of linear and retrospective process tracing approaches. Both approaches indicate that many Korean securities analysts exhibited fixated behaviors, while the materiality effects of the change on fixation were not supported. This study shows that the subjects did not alter their models after an accounting change because the net income to be affected by the change was relatively uninfluential in their decision making, not because of habitual responses to income number.