Hiding in the Herd? Political Uncertainty and Strategic Risk Attribution in Disclosures

Speaker：Lin Bingxuan, Professor, University of Rhode Island

Host：Luo Danglun, Professor, Lingnan College

Time and Date：15:00, March 13, 2026 (Friday)

Venue：Wang Dao Han Conference Room (101), Lingnan Hall

Language：English + Chinese

Abstract：

In the United States, mandatory reporting and market concerns force managers to speak even during periods of turmoil. We examine how managers respond to this constraint by changing the locus of risk attribution in Management's Discussion and Analysis. Using large language model embeddings and supervised neural network learning, we construct a disclosure-implied systematic risk share (SRS) that links narrative semantics to the systematic component of post-disclosure return variance. We find that political uncertainty causes a "hiding in the herd" response, where managers increasingly attribute risk to market-wide headwinds rather than firm-specific factors. We validate that SRS tracks the structural source of risk using a mirror-image test: when political shocks are firm-specific (i.e., the U.S.-China trade war), attribution shifts to idiosyncratic factors, thereby reducing SRS. The use of systematic attribution is exacerbated by short-term reporting pressure and poor monitoring and is mainly driven by salient policy debates in trade and healthcare.

Profile:

Lin Bingxuan is currently a professor of finance at the University of Rhode Island and a William Aigen Chair Professor. He holds a Ph.D. in finance from Georgia State University. His research focuses on corporate mergers and acquisitions, corporate governance, information disclosure, China's capital markets, and behavioral finance. He has published over 60 papers in top-tier academic journals both domestically and internationally, including the British Accounting Review, Accounting Horizons, Journal of Corporate Finance, Journal of Accounting and Public Policy, Journal of Business Finance and Accounting, Economic Research Journal, Journal of Management Sciences in China, Journal of Financial Research and Accounting Research. Professor Lin is currently an editorial board member of the Journal of Accounting and Public Policy and China Journal of Accounting Research. He has served as a guest editor-in-chief for the Journal of Accounting and Public Policy and the European Journal of Finance. He was also a specially appointed professor at Sun Yat-sen University and China University of Mining and Technology. Currently serving as a specially appointed professor at Zhongnan University of Economics and Law, Capital University of Economics and Business,and Ocean University of China.