Different ways of managing risk as reported in 10‐Ks: A supervised learning approach

Richard Friberg and Thomas Seiler

The Financial Review, 2021, vol. 56, issue 4, 773-792

Abstract: We use supervised learning on annual reports of publicly listed US firms (10‐Ks) to build textual measures of risk management via derivatives, insurance, diversification, long‐run contracts, and credit lines. Validation exercises favor these supervised learning‐based measures over those based on word lists. Panel regressions (1996–2015) indicate that firms using one form of risk management are more likely to also use other forms. In contrast, intensive use of one risk management technique associates with less intensive use of other methods. Findings are consistent with a model featuring fixed costs of organizational capacity for managing risks and increasing marginal costs of hedging.

Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://doi.org/10.1111/fire.12268

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:finrev:v:56:y:2021:i:4:p:773-792

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0732-8516

Access Statistics for this article

The Financial Review is currently edited by Cynthia J. Campbell and Arnold R. Cowan

More articles in The Financial Review from Eastern Finance Association Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().