Measuring the differentiation and decentralization of managers' risk attention and their impacts.

Managers' attention to different risk factors conveys important information to investors. This paper examines the association between managers' risk attention allocation schemes and the performance of firms across different sectors. We innovatively use the text mining approach to measure the differentiation and decentralization of risk attention from textual risk disclosures reported in 65,878 10-K statements. The results show significant sector heterogeneity in managers' attention to different risk topics. For the consumer goods sector, managers with differentiated and decentralized topics can improve the company's profitability and solvency. In contrast, managers in the financial and healthcare sectors need to maintain topic attention concentration. In addition, we find that managers' attention to product approval, system security, and business impact has gradually increased over time to adapt to the internet economic environment. [ABSTRACT FROM AUTHOR]