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Corporate governance, firm characteristics and risk management committee formation in Australian companies

Citation

Subramaniam, N and McManus, L and Zhang, J, Corporate governance, firm characteristics and risk management committee formation in Australian companies, Managerial Auditing Journal, 24, (4) pp. 316-339. ISSN 0268-6902 (2009) [Refereed Article]

Copyright Statement

Emerald Group Publishing Limited

DOI: doi:10.1108/02686900910948170

Abstract

Purpose: The purpose of this paper is to examine how a risk management committee (RMC), as a newly evolving sub‐committee of the board of directors, functions as a key governance support mechanism in the oversight an organisation's risk management strategies, policies and processes. However, empirical evidence on the factors associated with the existence and the type of RMCs remains scant.

Design/methodology/approach: Using an agency theory perspective, this study investigates the association between board factors such as proportion of non‐executive directors, Chief Executive Officer duality, and board size; as well as, other firm‐related factors (e.g. auditor type, industry, leverage, and complexity), and the existence of a RMC, and the type of RMC (namely, a separate RMC versus one that is combined with the audit committee). Data was collected from the annual reports of the top 300 Australian Stock Exchange (ASX)‐listed companies.

Findings: The results, based on logistic regression analyses, indicate that RMCs tend to exist in companies with an independent board chairman and larger boards. Further, the results also indicate that in comparison to companies with a combined RMC and audit committee, those with a separate RMC are more likely to have larger boards, higher financial reporting risk and lower organisational complexity.

Research limitations/implications: Data limited to top 200 top ASX‐listed companies, thus restricting generalisability of the results.

Originality/value: The findings of this study provide additional information on the use and design of RMCs in a voluntary setting.

Item Details

Item Type:Refereed Article
Keywords:risk management, corporate governance, Australia
Research Division:Commerce, Management, Tourism and Services
Research Group:Banking, Finance and Investment
Research Field:Investment and Risk Management
Objective Division:Economic Framework
Objective Group:Management and Productivity
Objective Field:Management
UTAS Author:McManus, L (Professor Lisa McManus)
ID Code:133446
Year Published:2009
Deposited By:TSBE
Deposited On:2019-06-27
Last Modified:2019-08-19
Downloads:0

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