City Research Online

Abstract

We study the convergence in the attention of decision-makers across the insurance and banking industries. Our analysis is based on textual risk disclosures (10-K reports from Securities and Exchange Commission, 2006-2018), giving a snapshot of corporate priorities and contexts. First, we theoretically link convergence with decision-making contexts via the Attention-Based View of the firm. Leveraging strategic management theory, we identify antecedents of convergence in attention, and therefore, systemic risk. The antecedents include common trends in the macro-environment, substitution threats, and management fashions. Second, we combine the theoretical framework with machine learning tools to create quantitative measures of convergence in attention and its antecedents. Finally, based on regression and sensitivity analyses, we identify the relative importance of different antecedents, showing that shared risk management fashions largely drive convergence in attention. This underlines the necessity for governance responses involving diverse stakeholders, and raises concerns about systemic risk induced by shared legitimacy concerns.

Publication Type:	Monograph (Working Paper)
Subjects:	H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Departments:	Bayes Business School Bayes Business School > Actuarial Science & Insurance
SWORD Depositor:	Symplectic Administrator

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