The role of risk management committee between risk-taking behavior and companies’ performance

Abstract

Purpose

This research aims to examine the moderating role of the existence of risk management committee between risk-taking behavior and companies’ performance.

Design/methodology/approach

Research sample includes 383 manufacturing company-year that listed on the Indonesian Stock Exchange period of 2017–2020. The risk-taking behavior includes the use of leverage, capital intensity, research and development intensity, and earnings uncertainty. The hypothesis test uses company fixed-effect regression.

Findings

The result shows that risk management committee moderates the effect of risk-taking behavior on companies’ performance. This research also finds the similar result when risk management committee and risk-taking behavior are examined on the future performance. In the further analysis, the result also finds that the expertise of risk management committee moderates the effect of risk-taking behavior on companies’ performance.

Originality/value

This research contributes to fill the previous gap of risk-taking behavior and companies’ performance by considering the existence of risk management committee to promote oversight role on risk-taking behavior. This research also contributes to give new evidence in Indonesia about the role of risk management committee to improve the benefits or to reduce the costs of risk-taking behavior.

Citation

Muqorobin, M.M., Rani, U. and Simamora, A.J. (2024), "The role of risk management committee between risk-taking behavior and companies’ performance", International Journal of Productivity and Performance Management, Vol. 73 No. 3, pp. 817-836. https://doi.org/10.1108/IJPPM-07-2022-0347