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Business Risks

What is Material Information?

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Material information is a fact that would be likely to influence a decision. It is a legal term that is evaluated according to its context.
The term material information is relevant to insider trading laws to differentiate information that is relevant to the price of a stock from information that isn't. For example, a firm's revenue and margin numbers for a quarter are likely to change the price of a stock. Information that is trivial, non-relevant or that represents an opinion such as an employee who complains about management incompetence is generally consider immaterial.
Material information is also used in other areas of corporate law. For example, a firm may be required to disclose all material information to investors on a timely basis or as part of a new offering of securities.
Overview: Material Information
Information that is relevant to a decision or price of an investment.
A pending merger or acquisition.
Financial results for a quarter.
An operational or financial risk.
Information concerning a potential conflict of interest.
Failure or potential failure of financial controls.
Liquidity events and issues.
The cost of a firm's capital such as the interest rate on lines of credit.
Information related to executives such as the firing of a CEO.
The loss of a large customer that is likely to impact revenue in a meaningful way.
Information security incidents.
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