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Article
Publication date: 9 October 2023

Olayinka Erin, Johnson Ifeanyi Okoh and Nkiru Okika

In recent time, stakeholders have called on corporate organizations to develop risk governance (RG) model that could strengthen effective risk disclosure quality (RDQ). Based on…

Abstract

Purpose

In recent time, stakeholders have called on corporate organizations to develop risk governance (RG) model that could strengthen effective risk disclosure quality (RDQ). Based on this premise, the purpose of this study is to examine the influence of RG on RD quality of 120 corporate organizations.

Design/methodology/approach

RG was measured by board risk committee size, board risk committee independence, board risk committee gender diversity, board risk committee expertise, board risk committee effectiveness, chief risk officer (CRO) presence and enterprise risk management (ERM) framework. This study has used both ordered logistic regression and probit regression to analyze the data set.

Findings

The number of members on the board risk committee, the proportion of women on that committee, the board expertise, the committee’s effectiveness, the presence of a CRO and the existence of an ERM framework were all found to have an impact on the quality of the risk information disclosed.

Practical implications

The study emphasizes the need for strong collaboration between the corporate board and external assurance in enhancing the quality of RD.

Originality/value

The findings contribute to growing literature in the area of RG and RD in Nigeria and by extension other sub-Saharan African countries.

Details

Journal of Financial Reporting and Accounting, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1985-2517

Keywords

Article
Publication date: 14 April 2023

Masculine Muhammad Muqorobin, Utpala Rani and Alex Johanes Simamora

This research aims to examine the moderating role of the existence 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.

Details

International Journal of Productivity and Performance Management, vol. 73 no. 3
Type: Research Article
ISSN: 1741-0401

Keywords

Article
Publication date: 20 March 2023

Arshad Hasan, Usman Sufi and Khaled Hussainey

This study aims to investigate the impact of risk committee characteristics on the risk disclosure of banking institutions in an emerging economy, Pakistan.

Abstract

Purpose

This study aims to investigate the impact of risk committee characteristics on the risk disclosure of banking institutions in an emerging economy, Pakistan.

Design/methodology/approach

The data are collected through a manual content analysis of 21 banks regulated by the State Bank of Pakistan over the period 2011–2020. The study utilizes the generalized least square (GLS) regression model as the method of analysis.

Findings

The study finds that risk committee size is positively associated with risk disclosure, which is in line with agency theory. However, risk committee independence and risk committee gender diversity are negatively associated with risk disclosure. This contradicts the theoretical perspective and is explained by the weak regulatory framework of Pakistan.

Research limitations/implications

This study was carried out in a single research setting, which limits the generalizability of its findings to other developed and emerging economies.

Practical implications

The results provide valuable insights for regulators by identifying the attributes that require regulatory focus to strengthen risk committees and enhance risk disclosure practices within the banking sector of Pakistan. The findings highlight the effectiveness of the risk committee size, call for fully independent risk committees and encourage greater representation of women in these committees.

Originality/value

This study contributes to the corporate governance literature by empirically examining the risk committee characteristics and their impact on the risk disclosure of banks in an emerging economy. Moreover, this study contributes to theory by utilizing upper echelon theory in addition to agency theory as the motivation for the study.

Details

Journal of Applied Accounting Research, vol. 24 no. 5
Type: Research Article
ISSN: 0967-5426

Keywords

Article
Publication date: 29 November 2022

Sitara Karim, Samuel A. Vigne, Brian M. Lucey and Muhammad Abubakr Naeem

While there is an increased demand from various corporate stakeholders on the need for public companies to have risk management frameworks as well as a stand-alone risk management…

Abstract

Purpose

While there is an increased demand from various corporate stakeholders on the need for public companies to have risk management frameworks as well as a stand-alone risk management committee to mitigate risks and simultaneously improve performance, this study investigates the effects of the risk management committee attributes on firm performance, and the role of board size is highlighted on this relationship in Malaysian listed companies.

Design/methodology/approach

Both accounting- and market-based performance measures have been used for measuring performance. A dynamic model using the generalized method of moments (GMM) has been employed to control for potential endogeneity, simultaneity and unobserved heterogeneity.

Findings

The findings reveal that risk management committee attributes such as size, independence and meetings negatively affect book-based performance measures and positively affect market-based performance measures. Moreover, board size positively moderates the risk management committee attributes and performance relationship. The study embraces the predictions of agency theory and resource dependence theory.

Practical implications

The findings are practically significant for Bursa Malaysia, Securities Commission Malaysia to assess the compliance of the Corporate Governance Code (MCCG, 2017) and for academia to further explore significant relationships in other emerging economies.

Originality/value

The paper contributes to multiple aspects: first, it studies the impact of risk management committee attributes on firm performance; second, it investigates the moderating effect of board size on RMC–performance relationship; in the end, the study employs dynamic modeling for estimation process to avoid dynamic endogeneity considered a main econometric problem for CG–performance relationships.

Details

International Journal of Emerging Markets, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1746-8809

Keywords

Article
Publication date: 1 January 2013

Tuan‐Hock Ng, Lee‐Lee Chong and Hishamuddin Ismail

The purpose of this paper is to identify the relationships between risk management committee characteristics and risk taking of the Malaysia's insurance companies, from 2003‐2011…

3036

Abstract

Purpose

The purpose of this paper is to identify the relationships between risk management committee characteristics and risk taking of the Malaysia's insurance companies, from 2003‐2011. The paper aims to examine three identified characteristics of a risk management committee, namely, size, independence, and number of meetings.

Design/methodology/approach

The sample comprises 329 observations throughout the nine years' time frame until 2011. Pearson's correlation, pooled ordinary least squares regression, and panel regression model are used in this study. Sensitivity testing with an alternative measure of underwriting risk is also performed.

Findings

Out of the three characteristics, size and committee independence appear to be negatively associated with underwriting risk. Meanwhile, the frequency of risk management committee meetings is insignificant in this study.

Research limitations/implications

The sample of this study is limited to the Malaysia's insurance sector only.

Originality/value

A risk management committee is an influencing force for risk oversight and the internal control system. The empirical evidence enriches the understanding of corporate governance in the context of the role of a risk management committee.

Details

The Journal of Risk Finance, vol. 14 no. 1
Type: Research Article
ISSN: 1526-5943

Keywords

Article
Publication date: 28 February 2023

Mohamed Moshreh Ali Ahmed

The first purpose of this paper is to investigate whether corporate governance mechanisms, in particular the characteristics of the board, audit committee and risk management…

1680

Abstract

Purpose

The first purpose of this paper is to investigate whether corporate governance mechanisms, in particular the characteristics of the board, audit committee and risk management committee, are associated with the level of disclosure in integrated reports of South African listed firms. The second purpose of this paper is to analyze how integrated reporting (IR) affects the sustainable development goals (SDGs).

Design/methodology/approach

This paper uses a mixed methods approach. First, a multiple regression analysis is used to estimate the impact of corporate governance mechanisms on IR practices of a sample of South African listed firms during the period between 2019 and 2021. Using the content analysis method to measure the level of IR, disclosures were measured using a disclosure index consisting of 60 information items developed from the IIRC framework and previous studies. Second, based on a database containing 33 articles in the Meditari Accountancy Research journal with a publication date from 2013 to 2021, a systematic review of the academic literature focusing on IR is conducted to analyze how IR influences SDGs.

Findings

The results indicate that board size, board independence and risk management committee independence have a positive effect on IR practices. However, board expertise, board activity, audit committee independence, audit committee size, audit committee expertise, audit committee meetings, risk management committee expertise, risk management committee meetings, risk management committee size and the auditor type are negatively related to IR practices. The results also indicate that IR has an important role in achieving SDGs by relying on integrated thinking that integrates sustainability into the enterprise’s strategy and helps the integration of capitals. In addition, sustainable business models create long-term values.

Research limitations/implications

This study was limited to a sample size of 75 firms, which is country-specific; however, it sets the tone for future empirical research on the subject matter. This study provides an avenue for future research in the area of corporate governance and IR practices in other emerging countries, especially other African countries.

Practical implications

This study provides useful insights for managers and policymakers to better understand which corporate governance mechanisms can best encourage a company to improve IR practices.

Originality/value

To the best of the author’s knowledge, this study is, perhaps, the first to examine the effect of risk management committee characteristics on IR practices. This study provides new insight into the contribution of accounting research toward the achievement of SDGs.

Details

Meditari Accountancy Research, vol. 31 no. 6
Type: Research Article
ISSN: 2049-372X

Keywords

Open Access
Article
Publication date: 10 March 2023

Karen-Ann M. Dwyer, Niamh M. Brennan and Collette E. Kirwan

This rich descriptive study examines auditors' client risk assessment (i.e. “key audit matters”/critical audit matters) disclosures in expanded audit reports of 328 Financial…

2419

Abstract

Purpose

This rich descriptive study examines auditors' client risk assessment (i.e. “key audit matters”/critical audit matters) disclosures in expanded audit reports of 328 Financial Times Stock Exchange (FTSE) 350 companies. The study compares auditor-identified client risks with corporate risk disclosures identified in audit committee reports, in terms of number and type of risks. The research also compares variation in auditor-identified client risks between individual Big 4 audit firms. In addition, the study examines auditor ranking of their client risks disclosed.

Design/methodology/approach

The study manually content analyses disclosures in audit reports and audit committee reports of a sample of 328 FTSE-350 companies with 2015 year-ends.

Findings

Audit committees identify more risks than auditors (23% more risks). However, auditor-identified client risks and audit-committee-identified risks are similar (80% similar), as are auditor-identified client risks between the individual Big 4 audit firms. Only ten (3%) audit reports rank the importance of auditor-identified client risks.

Research limitations/implications

Sample is restricted to one year, one jurisdiction, large-listed companies and companies audited by Big 4 auditors.

Practical implications

The study provides important insights for regulators, auditors and users of financial statements by identifying influences on disclosure of auditor-identified client risks.

Originality/value

The paper mobilises institutional theory to interpret the findings. The findings suggest that auditor-identified client risks in expanded audit reports may demonstrate mimetic behaviour in terms of similarity with audit-committee-identified risks and similarity between individual Big 4 audit firms. The study provides important insights for regulators, auditors and users of financial statements by identifying influences on disclosure of auditor-identified client risks.

Article
Publication date: 28 July 2020

Mansor Isa and Siew-Peng Lee

This study aims to investigate how the Shariah committee in Islamic banks affects banks’ risk-taking behaviour and performance.

Abstract

Purpose

This study aims to investigate how the Shariah committee in Islamic banks affects banks’ risk-taking behaviour and performance.

Design/methodology/approach

The sample is based on a panel data of 15 Islamic banks in Malaysia over the period 2007–2016. The generalised least squares random-effects method is used to study the relationship between the Shariah committee and bank risk-taking and performance.

Findings

The findings suggest that the number of committee members with Shariah qualification and the number of reputable members are negatively related to risk-taking while members with finance/banking qualifications are positively related. On the financial performance, evidence of two variables that are positively related to performance, namely, members with finance/banking qualification and reputable members was found. Female participation is weakly negatively related to risk-taking but unrelated to performance. Other variables, such as committee size, years of experience and frequency of meetings, are found to be unrelated to risk-taking and performance.

Practical implications

The paper points to two implications. First, the roles and functions of the Shariah committee should be revised to emphasise Shariah-compliance, as well as the business aspects of the banking operations. Second, the regulators should also look at the composition of the Shariah committee to ensure a diversity of expertise related to the banking business.

Originality/value

This paper extends the scope and coverage of previous studies by investigating the attributes of the Shariah committee, which could be important in influencing the risk-taking behaviour and performance of banks.

Details

Journal of Islamic Accounting and Business Research, vol. 11 no. 9
Type: Research Article
ISSN: 1759-0817

Keywords

Article
Publication date: 12 September 2020

Md. Borhan Uddin Bhuiyan, Muhammad A. Cheema and Yimei Man

The authors empirically examine the impact of the stand-alone risk committee on corporate risk-taking and firm value.

1080

Abstract

Purpose

The authors empirically examine the impact of the stand-alone risk committee on corporate risk-taking and firm value.

Design/methodology/approach

The authors argue that the existence of a stand-alone risk committee enhances the quality of corporate governance, which reduces corporate risk-taking and strengthens the firm value that might improve investor protection.

Findings

The authors find corporate risk-taking decline significantly for firms that have a stand-alone risk committee compared with firms that have a joint audit and risk committee. The authors also find that the presence of a stand-alone risk committee is positively associated with firm value.

Practical implications

The evidence is consistent with the proposition that firms with a stand-alone risk committee can effectively evaluate potential risks and implement a proper risk management system.

Originality/value

This is the first paper that investigates the association between the existence of a stand-alone risk committee and firm risk-taking in a multi-industry setting. Also, our research extends the association between a stand-alone risk committee and firm value.

Details

Managerial Finance, vol. 47 no. 3
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 7 January 2019

Wan Nailah Abdullah and Roshima Said

This empirical study aims to examine two areas: first, the characteristics of the audit committee and their relationship with corporate financial crime so as to ensure that their…

1449

Abstract

Purpose

This empirical study aims to examine two areas: first, the characteristics of the audit committee and their relationship with corporate financial crime so as to ensure that their effectiveness as a corporate governance mechanism is still relevant; and second, the effectiveness of having a risk committee which is separated from the audit committee in the prevention of corporate financial crime.

Design/methodology/approach

This empirical research was carried out by using a Web-based data collection for corporate financial crime cases.

Findings

While the results for audit committee characteristics are not supported, the findings, however, indicate a significant relationship between the existence of a stand-alone risk committee with corporate financial crime incidences.

Practical implications

The result of the study serves as an empirical indicator of a firm’s consideration in deciding on the implementation of a stand-alone risk committee from its audit committee.

Originality/value

Both the descriptive and correlation analyses produced by this paper provide new insights into the extent of corporate financial crime, as well as the empirical evidence of the effectiveness of having a stand-alone risk committee.

Details

Journal of Financial Crime, vol. 26 no. 1
Type: Research Article
ISSN: 1359-0790

Keywords

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