Does risk management committee gender diversity matter? A financial distress perspective

2019 ◽  
Vol 34 (8) ◽  
pp. 1050-1072 ◽  
Author(s):  
Jing Jia
Keyword(s):  
Risk Management ◽  
Empirical Evidence ◽  
Financial Distress ◽  
Gender Diversity ◽  
Listed Companies ◽  
Management Committee ◽  
Content Type ◽  
Listed Firms ◽  
The Relationship ◽  
Risk Management Committee

Purpose Using 2010 corporate governance principles and recommendations (CGPR) as a natural setting, the purpose of this paper is to investigate the relationship between risk management committee (RMC) gender diversity and a firm’s likelihood of financial distress. Empirical evidence regarding whether CGPR (2010) enhances RMC gender diversity (RMCGD) is also provided. Design/methodology/approach Data were collected from the annual reports of the top 300 Australian Stock Exchange (ASX) listed companies from 2007 to 2014. To control for potential endogeneity, the association between (RMCGD) and a firm’s likelihood of financial distress was investigated using an instrumental variable approach (panel 2SLS regression). The relationship between CGPR (2010) and RMCGD was explored using panel regression analysis with firm fixed effects. Findings RMCGD was found to be associated with a lower probability of financial distress, suggesting that women are better at monitoring and reducing firms’ excessive risk-taking behaviours, which, in turn, decreases firms’ risk of financial distress. The results also indicate that CGPR (2010) is quite effective in enhancing committee gender diversity. In the additional analysis, the results show that RMCGD moderates the negative relationship between risk and likelihood of financial distress. Importantly, the proportion of women with financial experience on RMCs is more effective in reducing the likelihood of financial distress compared to the proportion of men with financial experience on RMCs. These results highlight the benefits of having a gender diverse RMC. Research limitations/implications The results were based on the top 300 ASX-listed companies; thus, restricting generalisability. In addition, this study only focussed on listed firms, non-listed firms may add additional insights to the literature. Practical implications The results provide new and useful empirical evidence about RMCGD for Australian policymakers. This paper suggests that, in the short-term at least, RMCGD should be encouraged by regulators. Regulators could also recommend that the firms with a non-diverse RMC include women with financial experience on their RMC. Originality/value Given that prior studies have indicated that gender diversity is closely related to risk, this study contributes to the previous literature by investigating RMCGD and its effect on the likelihood of financial distress. It is expected that the role of RMC member would be to protect the firm from ultimate failure (likelihood of financial distress), especially during a financial crisis.

scholarly journals Risk Management Committee and Disclosure of Hedging Activities Information among Malaysian Listed Companies

2018 ◽  
Author(s):  
Azrul Bin Abdullah ◽  
Ku Nor Izah Ku Ismail ◽  
Norshamshina Mat Isa
Keyword(s):  
Risk Management ◽  
Regression Analysis ◽  
Information Disclosure ◽  
Gender Diversity ◽  
Listed Companies ◽  
Annual Reports ◽  
Management Committee ◽  
The Relationship ◽  
Risk Management Committee

This paper examines the relationship between Risk Management Committee (RMC) characteristics and the extent of hedging activities disclosure within the annual reports of the Malaysian listed companies. In particular, relationships are tested on RMC size, independence, RMC meeting, RMC gender diversity and RMC training. Our regression analysis shows that RMC independence significantly and negatively influences the extent of hedging activities information disclosure, while RMC meeting positively influences the disclosure. The implications of these findings are discussed.

Risk management committee and risk management disclosure: evidence from Australia

2019 ◽  
Vol 31 (3) ◽  
pp. 438-461 ◽  
Author(s):  
Jing Jia ◽  
Zhongtian Li ◽  
Lois Munro
Keyword(s):  
Risk Management ◽  
Human Capital ◽  
Least Squares ◽  
Empirical Evidence ◽  
Design Methodology ◽  
Independence Number ◽  
Ordinary Least Squares ◽  
Content Type ◽  
The Relationship ◽  
Risk Management Committee

Purpose This paper aims to examine the relationship between risk management committees (RMCs) and risk management disclosure (RMD) quality. Specifically, the existence of stand-alone RMCs and a number of RMC characteristics, including RMC size, RMC independence, number of RMC meetings and RMC members’ human capital is investigated. Design/methodology/approach The sample comprises top 100 Australian Securities Exchange (ASX)-listed companies during the period between 2010 and 2012, when RMD began to be guided by detailed recommendations in Australia. Following the RMD framework used by Jia et al. (2016), RMD quality is measured based on its quantity, relevance, width and depth. Ordinary least squares (OLS) regressions were used to test the relationship between stand-alone RMC, RMC characteristics and RMD quality. Findings The results show that the existence of a stand-alone RMC, the human capital of RMC and RMC size are positively associated with RMD quality. In contrast, RMC independence and the number of RMC meetings are not found to have a significant association with RMD quality. Originality/value This study contributes to the current RMD literature by investigating whether a stand-alone RMC and different RMC characteristics are associated with RMD quality. The results of this study provide useful and new empirical evidence about the relationship between RMCs and RMD quality for researchers, companies, and regulators.

scholarly journals Hedging Activities Information and Risk Management Committee Effectiveness: Malaysian evidence

2018 ◽  
Author(s):  
Azrul Bin Abdullah ◽  
Ku Nor Izah Ku Ismail
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Significant Influence ◽  
Statistical Models ◽  
Voluntary Disclosure ◽  
Annual Reports ◽  
Management Committee ◽  
Corporate Governance Mechanisms ◽  
The Relationship ◽  
Risk Management Committee

This study examines the extent of information about hedging activities disclosures within the annual reports of Main Market companies listed on Bursa Malaysia. The extent of hedging activities disclosures is captured through a 32-item-template, which consists of a mandatory and voluntary disclosure scores. The results of this study indicate that the extent of information on hedging activities disclosure is still insufficient among the sampled companies even though the disclosure scored is quite high. This study also examines the relationship between the existence of risk management committee (RMC), its characteristics and the extent of information on hedging activities disclosure in two separate statistical models. The regression results imply that the existence of RMC is positive but does not significantly influence the extent of information on hedging activities disclosure. However its characteristics (i.e. RMC independence and RMC meeting) have a significant influence. The findings may provide some meaningful insights to regulators, policymakers and researchers, towards the establishment of RMC as a part of the internal corporate governance mechanisms. In addition to its existence, the effectiveness of RMC also needs to be emphasised.

scholarly journals Board characteristic and corporate environmental reporting in Nigeria

2019 ◽  
Vol 4 (1) ◽  
pp. 2-17 ◽  
Author(s):  
Usman Shehu Aliyu
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Significant Relationship ◽  
Board Independence ◽  
Environmental Reporting ◽  
Management Committee ◽  
Content Type ◽  
Quality Reporting ◽  
Corporate Environmental Reporting ◽  
Risk Management Committee

Purpose The issue that revolves around corporate governance and corporate environmental reporting (CER) has always been an essential element deliberated upon globally. A good corporate governance mechanism instills an investor’s confidence and ensures a transparent process that facilitates more disclosures and quality reporting. Precisely, the purpose of this paper is to investigate the relationship between corporate governance variables, namely, board size, board independence, board meeting (BM), risk management committee composition and CER in Nigeria. This study utilized the data obtained from the annual reports of 24 non-financial public listed companies in the Nigeria Stock Exchange comprising three sectors, namely, industrial goods, natural resources and oil & gas for the period of 2011–2015. The model of this study is theoretically based on agency theory. In analyzing data, this study utilized panel data analysis. Based on the Hausman test, the random effect model was used to examine the effect of predictors on CER. The result indicates a positive significant relationship between board independence and CER. Similarly, a positive significant relationship between BM and CER is revealed in the study. However, there is no significant relationship between other hypothesis variables and CER. Finally, the study provides suggestions for future research and several recommendations for regulators, government and accounting professional bodies. Design/methodology/approach The data was analysed using statistics. Findings The result indicates a positive significant relationship between board independence and CER. Similarly, a positive significant relationship between BM and CER is revealed in the study. However, there is no significant relationship between other hypothesis variables and CER. Originality/value There are no prior studies linking risk management committee with CER.

scholarly journals CORPORATE GOVERNANCE AND BUSINESS PERFORMANCE: THE MODERATING ROLE OF EXTERNAL AUDIT QUALITY

2020 ◽  
Vol 2 (2) ◽  
pp. 34-44
Author(s):  
Foong Seng Wong ◽  
Yuvaraj Ganesan ◽  
Anwar Allah Pitchay ◽  
Hasnah Haron ◽  
Ratih Hendayani
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Business Performance ◽  
Audit Quality ◽  
Internal Audit ◽  
External Audit ◽  
Management Committee ◽  
Age Diversity ◽  
The Relationship ◽  
Risk Management Committee

The purpose of this study is to investigate the relationship of corporate governance attributes, i.e. board size, age diversity, risk management committee and internal audit function with the business performance of the organisation. In addition, this study also examines the role of external audit quality as a moderating effect in the relationship between corporate governance and business performance. The study adopted a quantitative approach and cross-sectional design where it used a sample of 120 listed companies in Malaysia for the year 2016. Data is collected based on secondary data which is annual report year 2016. The result shows board size and the existence of risk management committee are negatively significant related to business performance while the other variables such as age diversity and internal audit function do not have an impact on business performance. Unexpectedly, external audit quality does not play a moderating role in related corporate governance and business performance. The study contributes to the understanding of the relationship between corporate governance and business performance in the developing country. The paper also provides related insight for regulators, policymakers and investors of emerging markets such as Malaysia. The study is the pioneer to understand the relationship of the risk management committee to business performance and moderating effect of external audit quality.

scholarly journals The Formation of Separate Risk Management Committee and the Effect on Modified Audit Report

2020 ◽  
Author(s):  
Suhaimi Ishak ◽  
Mohd ‘Atef Md Yusof
Keyword(s):  
Risk Management ◽  
Empirical Evidence ◽  
Multivariate Analyses ◽  
Annual Reports ◽  
Audit Report ◽  
Management Committee ◽  
Risk Management Committee

The aim of the paper is to examine the formation of a separate risk management committee (RMC) and its effect on the modified audit report among the non-banking and financial companies listed in Bursa Malaysia. Data was collected from the annual reports of a sample of 300 companies from 2004 until 2009. Both descriptive and multivariate analyses were employed to address the research objectives. The results indicate that a separate RMC is negatively related with the acceptance of the modified audit report. Further, the RMC’s members with independent non-executive status and members with accounting and financial background will also probably reduce the acceptance of the modified audit report. However, losses recorded for previous financial years are likely to increase the issuance of modified audit report by the auditor. The period of auditor engagement with the client and client size will also affect the modified audit report. The findings provide empirical evidence on the development and importance of a separate RMC for the modified audit report.  

scholarly journals Can the risk management committee improve risk management disclosure practices in Indonesian companies?

2021 ◽  
Vol 18 (3) ◽  
pp. 204-213
Author(s):  
Linda Agustina ◽  
Kuat Waluyo Jati ◽  
Niswah Baroroh ◽  
Ardian Widiarto ◽  
Pery N. Manurung
Keyword(s):  
Risk Management ◽  
Firm Size ◽  
Ownership Concentration ◽  
Manufacturing Companies ◽  
Corporate Risk Management ◽  
Management Committee ◽  
Management Disclosures ◽  
Corporate Risk ◽  
The Relationship ◽  
Risk Management Committee

This study examines the role of the risk management committee as a moderating variable. The risk management committee will moderate the relationship between firm size, profitability, ownership concentration, and the size of the Enterprise Risk Management (ERM) disclosure board. The study is based on agency theory, which discusses the relationship between management and company owners and shareholders. The research sample consisted of 56 manufacturing companies in Indonesia with 224 units of analysis obtained using the purposive sampling technique. It has been proven that the risk management committee can moderate the relationship between firm size and ERM disclosure and ownership concentration and ERM disclosure. Company size is known to affect the disclosure of risk management in a company. But ownership concentration shows different things, that is, it does not affect corporate risk management disclosures. The results also show that the risk management committee cannot moderate the relationship between profitability and the size of the board of commissioners on the company’s risk management disclosures. It has also not been proven that profitability and the size of the board of commissioners directly affect corporate risk management disclosures. Thus, it can be stated that the risk management committee plays a role in controlling the extent of the company’s risk management disclosures; this is necessary to maintain stakeholder trust in the company.

Corporate governance challenges and opportunities in mitigating corporate fraud in Malaysia

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Emelia A. Girau ◽  
Imbarine Bujang ◽  
Agnes Paulus Jidwin ◽  
Jamaliah Said
Keyword(s):  
Corporate Governance ◽  
Empirical Evidence ◽  
Listed Companies ◽  
Probit Regression ◽  
Best Interest ◽  
Board Size ◽  
Corporate Fraud ◽  
Content Type ◽  
Challenges And Opportunities ◽  
The Relationship

Purpose This study aims to examine the relationship between corporate governance and the likelihood of corporate fraud in Malaysia. Design/methodology/approach The sample of fraudulent companies in this study is the public listed companies that were charged with furnishing false statements to the Securities Commission of Malaysia and Bursa Malaysia Securities Berhad and was listed in the Malaysian Securities Commission Enforcement Release from the year 2000 to 2016. The non-fraudulent companies, which are the control companies in this study, were selected from public listed companies listed in Bursa Malaysia, based on their similarity to the fraudulent companies in terms of time, size and industry type. The panel probit regression analysis was used to examine the relationship between corporate governance characteristics and the occurrence of corporate fraud. Findings The findings of this study suggest that board size and executive directors’ compensation are the corporate governance characteristics that can effectively combat corporate fraud incidences in Malaysia. The corporate governance features, namely the board of directors’ independence, frequency of board meetings, CEO duality, CEO’s age, and share ownership owned by directors and CEO, do not significantly influence corporate fraud incidences in Malaysia. Originality/value Although previous studies provide inconsistent findings on the association between board size and corporate fraud incidences, this study contributes to the existing literature by providing empirical evidence that smaller board sizes provide more effective monitoring functions to minimize corporate fraud incidences in the Malaysian context. The empirical evidence also supports the agency theory proposition where managers with high compensation will act in the best interest of shareholders and less likely to focus on their interests, thus deterring them from committing fraudulent acts.

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