Prior research finds that the textual content of Item 1A risk factor disclosures in 10‐K filings provides valuable information about firm risk. However, less is known about whether the ordering of these disclosures conveys useful information. We examine whether the relative prominence of individual risk factors within Item 1A reflects firms' exposure to the underlying risks and predicts future adverse outcomes. Focusing on credit and goodwill risk disclosures, we find that risk factor prominence is associated with proxies for the underlying risks and predicts credit rating downgrades, bankruptcy filings, and goodwill impairments. We further find that prominence is more informative during periods of high information uncertainty, when the benefits of risk disclosure are predicted to be greater. Overall, our findings suggest that risk factor prominence offers a valuable signal of firm risk that complements the textual disclosures in Item 1A. Accordingly, investors, analysts, lenders, auditors, boards, and regulators should consider both the level of, and changes in, risk factor prominence when evaluating firm risk.

We document that firms experience large negative stock returns during, and positive returns following, the first informational events after forced CEO turnovers. This V-shaped return pattern is driven by the strategic sequential disclosure of bad news and good news, aligned with incoming CEOs’ incentives to manage expectations. The pattern is more pronounced when these incentives are stronger, such as when firms earn higher stock returns and have higher valuation uncertainty leading up to the informational events. Evidence from firms’ earnings surprises, analysts’ forecast revisions, and large language model-based measures of disclosure behavior indicates that incoming CEOs often initially release bad news about realized and short-term earnings, projecting a broadly pessimistic outlook for the firm’s future performance, and subsequently disclose favorable news about longer-term earnings prospects. Our findings suggest that investors make the costly mistake of failing to discern the incentives behind managers’ disclosure.

This paper investigates how historically intensive irrigation systems influenced enduring institutional and cultural traits that constrain firms’ access to finance. Combining geo-climatic measures of irrigation potential with firm-level data from 174 ethnic regions across 146 countries, we find that historically irrigated societies are characterised by weaker property rights, lower trust in financial institutions, and greater reliance on internal financing. Firms in these regions report more severe financial obstacles and higher rejection rates from banks. Implementing a spatial regression discontinuity design around the Lower Rhine and using irrigation potential as an instrument, we provide evidence consistent with a long-term influence of historical irrigation on modern credit frictions. The effects are most evident among privately owned domestic firms, unaffiliated firms, and those with higher female ownership. These findings indicate that ancient irrigation infrastructure is associated with persistent imprints on contemporary financial markets.