Statistical Significance Testing in Science and in the Courts after Matrixx
Expert Witnesses Newsletter, American Bar Association Section of Litigation, Winter 2013, Forthcoming
6 Pages Posted: 26 Mar 2013 Last revised: 28 Mar 2013
Date Written: March 8, 2013
The decision by the U.S. Supreme Court in the "Matrixx" case has caused some confusion about statistical significance and materiality. This article clarifies the role of statistical significance testing in the sciences and examines how it is used in securities litigation to evaluate the materiality of disclosures. The article concludes that SCOTUS was not repudiating significance tests of stock price movements, but was instead commenting on statistical significance in a different context, i.e., adverse incident reports.
Keywords: SCOTUS, Matrixx, significance, materiality
JEL Classification: C12, K00
Suggested Citation: Suggested Citation