Did the banking sector foresee the financial crisis? Evidence from risk factor disclosures

Beginning in December 2005, the SEC required registrants to discuss “the most significant factors that make the company risky” under the Risk Factors item (Item 1A) in annual reports. The objective of this research is to evaluate the informativeness and timeliness of Item 1A in the setting of the banking industry during the financial crisis of 2008, and to investigate the characteristics of banks that moved fastest in communicating information...