A:

A company logo change usually constitutes a material disclosable event. Securities law requires that companies disclose all material information and corporate events to shareholders, and material information withheld from shareholders could be a violation of the law. A logo change is normally a material change if the business depends on its brand value or recognition of the brand to attract consumers. For example, if Coca Cola was to change its famous logo to something drastically different, this would be a material event. In addition, logo changes are usually public knowledge right away because they are quite hard to hide from shareholders.

Some examples of other common material events include: a company's entry into or termination of material agreements, material financial obligations or off-balance sheet arrangements, material costs of disposal activities or material costs of exiting a project, and material errors in a previous financial statement. Additionally, material impairments, delisting from a stock exchange or failure to meet listing requirements are also material events.

In general, to determine if something is a material event, you would have to ask if that information was revealed, would it affect a shareholder's investment decision. This process of determining if something is material can be quite subjective, and further information and guidance can be obtained from the Securities and Exchange Commission (SEC).

For more on disclosures, take a look at our article Disclosures: The Good, The Bad, And The Ugly.

This question was answered by Joseph Nguyen.

RELATED FAQS
  1. On which financial statement does a company list its raw material costs?

    Discover what items are raw materials, how raw material costs affect businesses, and where these costs are recorded on a ... Read Answer >>
  2. What is the difference between work in progress (WIP) and raw materials in accounting?

    Learn about the difference in inventory financial accounting between works in progress and raw materials, as reported in ... Read Answer >>
  3. What are some examples of prime cost items?

    Learn about prime cost, including the definition of raw materials and direct labor, and how the types of expenses included ... Read Answer >>
  4. What other sectors are most highly correlated with the automotive sector?

    Learn more about industries that are closely related to the automotive industry. Explore investment opportunities and industries ... Read Answer >>
  5. Is a private company required to disclose financial information to the public?

    Understand whether a private company is required to disclose financial information to the public. Learn what is required ... Read Answer >>
Related Articles
  1. Investing

    The Debt Report: The Materials Sector

    Find out why the U.S. materials sector has accumulated more and more debt each year between 2011 and 2015, outstripping valuation gains.
  2. Investing

    What are Top 3 Materials Equity Mutual Funds?

    Read about mutual funds covering the basic materials sector that could be excellent buys after a catastrophic 2015 for the category.
  3. Trading

    Traders Turn Defensive and Look to Basic Materials for Support (DD, DOW)

    Bullish chart patterns on basic materials stocks suggest traders are turning defensive. We'll take a look at several charts that are pointing to higher prices.
  4. Investing

    How Does a Company Use Raw Materials?

    Raw materials are the basic components of a finished product.
  5. Investing

    Material Adverse Effect A Warning Sign For Stocks

    Learn what this phrase means and how to spot it in a company's financial statements.
  6. Financial Advisor

    Asset Manager Ethics: Rules Governing Capital Markets

    The integrity of the capital markets needs to be kept at utmost importance for all investors. This article shows how to maintain the integrity while investing.
  7. Investing

    How Insider Trading Is Prevented in Corporations

    Insider trading can undermine the markets and damage reputations, so companies and regulators alike have instituted policies and actions to prevent it.
  8. Investing

    5 Popular Materials ETFs in 2016 (GDX, XLB)

    Learn how the five most popular materials ETFs for 2016 can provide exposure to large-cap materials companies, homebuilders and mining companies of all sizes.
  9. Investing

    Are These the Top Basic Materials Stocks of 2016?

    It may be difficult to find winning basic materials stocks in 2016. But here's one choice to consider for diversification purposes.
  10. Investing

    Materials Sector ETF (XLB) vs. Mutual Fund (VMIAX) Study

    Discover fund investment options in the materials sector, including an ETF, The Materials Select Sector SPDR (XLB), and a mutual fund, The Vanguard Materials Index (VMIAX).
RELATED TERMS
  1. Disclosable Event

    A corporate event that is disclosed to shareholders. Securites ...
  2. Basic Materials Sector

    A category of stocks that accounts for companies involved with ...
  3. Material Weakness

    When one or more of a company's internal controls, put in place ...
  4. Proxy Materials

    Documents regulated by the Securities & Exchange Commission in ...
  5. Material Participation Test

    A set of criteria that determines whether a taxpayer is a material ...
  6. Logo

    A graphical mark used to identify a company, organization, product ...
Hot Definitions
  1. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
  2. Quantitative Easing

    An unconventional monetary policy in which a central bank purchases private sector financial assets in order to lower interest ...
  3. Risk Averse

    A description of an investor who, when faced with two investments with a similar expected return (but different risks), will ...
  4. Indirect Tax

    A tax that increases the price of a good so that consumers are actually paying the tax by paying more for the products. An ...
  5. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s loss, so that the net change in wealth or benefit is zero. ...
  6. Beta

    Beta is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. ...
Trading Center