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Shared exposures or management fashions? Drivers of cross-industry convergence of textual risk disclosures

Fang, L., Lanzolla, G. & Tsanakas, A. ORCID: 0000-0003-4552-5532 (2024). Shared exposures or management fashions? Drivers of cross-industry convergence of textual risk disclosures. .


We contribute to the study of systemic risk, by introducing quantitative measures for the convergence in the attention of decision-makers across industries, and for its contextual antecedents. Our analysis is based on textual data (10-K reports from Securities and Exchange Commission of insurers and banks, 2006-2018), giving a snapshot of decision-makers priorities and contexts. First, we theoretically connect systemic risk with the context of decision making through the lens of the Attention-Based View of the firm. Second, through strategic management theory, we establish a framework for antecedents of convergence in attention, and therefore, systemic risk. These antecedents include common trends in the macro environment, threat of substitution, and management fashions. Third, 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 dominant antecedent of inter-industry systemic risk. We show that shared risk management fashions largely drive convergence in attention. This finding underlines the need for responses to systemic risk engaging a wide range of stakeholders through inclusive governance and raises the spectre of a type of systemic risk being 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:
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