Investing in a Digital Asset Environment: The Effects of Staff Accounting Bulletin 121 and the Fear of Missing Out

In recent years, regulators have become concerned that investors will be misled in the largely unregulated crypto-asset environment. Particularly, the U.S. Securities and Exchange Commission (SEC) has become concerned about the effects that the Fear of Missing Out (FoMO) could have on investors in the crypto-asset space (SEC, 2021a). This dissertation investigates, in an experimental setting, whether Staff Accounting Bulletin 121 (SAB 121) - recently issued financial reporting guidance by the U.S. Securities and Exchange Commission (SEC) - protects investors with higher levels of FoMO in the crypto-asset environment. Two experiments were carried out online through Prolific using a sample of 95 retail investors (Experiment 1) and 412 retail investors (Experiment 2). In Experiment 1, consistent with social psychology theory, I find that investors with higher levels of FoMO experience more negative emotions at the thought of missing out on future financial gains as they exhibit a higher propensity to invest in the crypto-asset market as compared to investors with lower levels of FoMO. I also find that exposure to SAB 121 decreases investors propensity to invest in the digital asset market with the effects being more pronounced for investors with higher levels of FoMO as compared to investors with lower levels of FoMO. Experiment 2 shows that SAB 121 decreases investors propensity to invest in the crypto-asset market by heightening their risk perception. I conclude the dissertation with a discussion of the implications of the findings for regulators, investors, and for accounting research.