Risk Management Committee Research Articles

Busy CEOs and audit fees: evidence from Indonesia

PurposeA company needs to use auditing procedures to ensure the reliability of financial statements while also providing transparency to stakeholders. The extent of risk associated with the company depends on the directors’ involvement in its daily operations. This paper aims to study the relationship between busy chief executive officers (CEOs) and audit fees.Design/methodology/approachThis study uses 1,037 data samples from companies listed on the Indonesia Stock Exchange from 2010 until 2018. It adopts the ordinary least squares method to test the hypothesis. Furthermore, this study performs robustness tests, such as propensity score matching (PSM) and Heckman’s two-stage least square tests (Heckman, 1979), to address the endogeneity issues.FindingsThis study finds that the appearance of a busy CEO in a company will significantly increase the audit fee. It also concludes that a long tenure of a busy CEO will substantially weaken the positive relationship between the CEO and the audit fee. However, this study discovers that, in a company with a busy CEO, a monitoring mechanism through the independent commissioner and risk management committee will only help to maximize the firm’s practical risk evaluation a little. This result is robust because the PSM and Heckman tests display consistent results, so it is free from endogeneity issues.Practical implicationsThis study is valuable for theoretical and practical development in Indonesia. Due to the minimum regulation about multiple positions on boards in Indonesia, the shareholders must be aware of the need to choose a board with more skill and commitment to improve the position of the company. This result also warns the C-level of the company to pay more attention to its risk-monitoring process to make it more effective and efficient.Originality/valueIndonesia is one of the countries that have implemented the two-tier governance system. With the minimum regulation about multiple directorships in Indonesia, this study offers new insights into how a busy CEO will be related to the audit outcomes.

Empirical Analysis of Good Corporate Governance and Firm Value on Sharia Banking in Indonesia

The position of Islamic banking in Indonesia still needs improvement because currently the market share of Islamic banking is only 6.52% of the entire proportion of national banking. So that the government seeks to improve by launching the Roadmap for the Development of Indonesian Sharia Banking (RP2SI) 2020-2025. However, there are things that hinder the accelerated growth of the sharia banking business, including the absence of significant business model differentiation, sub-optimal quality and quantity of human resources. So that GCG analysis is needed to increase the value of Islamic banks. The purpose of this study is to see how much influence the GCG has on firm value using PBV theory. The research method used in this study is multiple linear regression analysis with secondary data of 13 Islamic Commercial Banks in Indonesia in 2017-2021. The results show that the Audit Committee, Corporate Governance Committee, and Risk Management Committee have a significant effect on firm value. Meanwhile, the Board of Commissioners, Remuneration and Nomination Committee, Risk Monitoring Committee and Institutional Ownership have no effect on company value.

Do ownership structures affect the establishment of a risk management committee? Evidence from an emerging market

Do ownership structures affect the establishment of a risk management committee? Evidence from an emerging market

Implementation of disaster risk reduction management of Visayas state university, Tolosa, province of Leyte-Philippines

In Leyte, one of the Philippines’ disaster-prone provinces, effective Disaster Risk Reduction Management (DRRM) is crucial for safeguarding lives and properties. This research explored gaps in DRRM implementation at Visayas State University Tolosa for 2022 using a qualitative case study approach. Focusing on the university’s Disaster Risk Reduction and Management Committee, comprising seven members, semi-structured interviews were conducted to discuss policy and standard requirements for academic institutions, observing ethical research principles. Four themes emerged: Institutional Preparedness, Disaster Risk Prevention and Awareness, Lifesaving and Protective Equipment, and Budget for Resilient Building Reconstruction. Key findings highlighted the importance of enhancing the university’s disaster policies, strategies, and building infrastructure. Adherence to the Philippine Building Code and a specific emergency plan, coupled with increased awareness campaigns, were deemed essential for improved safety. Notably, gaps were identified in the provision of rapid communication technology, solar lighting, powerful generators, and emergency vehicles. The study also underscored the necessity for dedicated funding to foster resilient building infrastructure, ensuring a safe environment for the university community.
 Keywords: Implementations; Disaster Risk Reduction Management; School.

The Impact of the Organization’s Internal Factors on the Effectiveness of Internal Auditing: A Field Study at Joint-Stock Companies Operating in the Republic of Yemen

The study aimed to identify the impact of organization’s internal factors on the effectiveness of internal auditing of joint-stock companies operating in the Republic of Yemen. To achieve this objective, (252) questionnaires were distribution to a purposive sample (24) companies, represented by the Administration of Internal Audit, Risk Management and Audit Committees, but only (115) were valid for analysis. The study findings revealed a positive impact of the organization’s internal factors on the effectiveness of internal auditing, and a high statistically significant positive impact of the factor of audit committees’ responsibility on achieving the effectiveness of internal auditing, followed by the factor of the internal audit independence. The findings also revealed that there is no impact of the factor of Internal auditing volume and senior management support on internal auditing. Moreover, based on the respondents' point of view, the findings revealed that the most dimensions related to the effectiveness of internal audit are the objectives related to internal control, objectives related to governance, and objectives related to risks. In light of these findings, the study recommends that the senior management of joint-stock companies should pay more attention to internal auditing in order to achieve its effectiveness.

The impact of female representation and ethnic diversity in committees on environmental, social and governance performance in Malaysia

Purpose This study aims to explore how females on committees (FOC) and committee ethnic diversity (CED) impact environmental, social and governance performance (ESGP). Design/methodology/approach This study examines 126 listed firms under the coverage of FTSE ESG Ratings in Bursa Malaysia between 2017 and 2019. This study applies partial least squares structural equation modeling (PLS-SEM) to examine the hypotheses. While the risk of common method variance is minimised using multiple data sources for the analysis, instrumental variable-free approach, i.e. Gaussian copula method which is implemented in SmartPLS 4.0 has been used to address the potential endogeneity of the model. Findings Empirical evidence demonstrates significant positive direct relationships between FOC and ESGP, as well as CED and ESGP. The argument of resource dependence theory and positive empirical results on the two direct relationships hold firm despite several committees being aggregated as one construct with the aim of providing different insights into the literature. Practical implications This study provides implications for firm leadership to consider reviewing the composition of committees by increasing female representation while striking a balance in the appointment of committee members of different ethnicities to enhance firm ESGP. Originality/value To the best of the author’s knowledge, this study adopts a holistic approach by capturing, for the first time, the female representation of audit, nomination, remuneration and risk management committees. These dimensions are further developed into a single quantifiable variable, presented as FOC. Similarly, the ethnic diversity of the respective committees is aggregated and developed into a single quantifiable construct: the CED. Unlike most existing studies that commonly use econometric software, the application of PLS-SEM in this study contributes to the limited body of corporate governance and ESG studies that use PLS-SEM.

Pelatihan Corporate Intelligence pada Badan Pengelola Keuangan Haji di Jakarta

Corporate Intelligence is focused on the collection and analysis of facts and other information that responds to the needs of key decision makers in the face of: major corporate action decisions that are high risk and complex and contain extraordinary risks or other important considerations required from Information collected from a variety of sources, including online information, subscriptions to highly specialized databases, hard-to-find public records, and knowledgeable and experienced individuals. Analysts risk extracting key facts from the public and their subject domains to a rigorous analytical framework. This process connects various pieces of information, forming illustrations and procedures. The results support sustainable business practices by offering informed and trusted decisions in all commercial contexts. Conversely, the costs associated with violations – from regulatory and legal fines to the reputation and good name of the company can be significant. The implementation of this community service activity collaborates with university lecturers Prof. Dr. Moestopo and Yogyakarta University of Technology who are also involved in the National Love Lovers Tourism Movement (GENPPARI). This training was given to personnel of the Risk Management Committee of the Hajj Financial Management Agency (BPKH) Jakarta and the results of this training were carried out to provide an understanding of the application of intelligence science in the implementation of organizational objectives as mandated by law. Starting from planning, implementing and supervising the receipt, development and expenditure of Hajj funds in order to provide the maximum benefit to Hajj pilgrims. The participants of this training were very enthusiastic because the discussion and question and answer sessions made the training atmosphere lively with various kinds of questions so that participants could ask questions related to the material presented.

Risk management committee, political connection and audit pricing: Evidence from Malaysia

This study investigates the impact of risk governance mechanisms on audit pricing in a relationship-based context. Specifically, this study considers how the formation of a Risk Management Committee (RMC) and its characteristics affect audit pricing and what its moderating effects are on the relationship between political connection and audit pricing. This study uses 2,460 firm-year observations from 2012 to 2017, comprising data from non-financial firms listed on the Main Market of Bursa Malaysia, Malaysia’s stock market. A panel regression analysis was adopted in the main analysis, which generated mixed support for the hypotheses. Results showed that auditors charged higher audit fees to politically connected firms. Similarly, politically connected firms that have an RMC tend to pay more audit fees. RMC meeting frequency, size and expertise are associated with lower audit fees. Politically connected firms with an RMC with independent members and more diverse experts tend to pay lower audit fees. The findings from this study can provide guidance to policy makers and practitioners on the composition of the RMC when formulating future risk management legislation.

Influence of the Board of Commissioners, Ownership Concentration, Audit Committee Meetings, Risk Management Committee, Leverage on Disclosure of Company Risk Management (Case Study of Banking Companies Registered on the Indonesia Stock Exchange for the 20

The research objective was to determine the effect of the board of commissioners, concentration of ownership, audit committee meetings, risk management committee, leverage on disclosure of corporate risk management in Banking Companies Registered on the Indonesia Stock Exchange for the 2018-2021 period. This type of research is quantitative research, data collection method is done by using documentation. The samples in this study were 28 banking companies listed on the Indonesia Stock Exchange during the 2018-2021 period. The data analysis techniques in this study were multiple linear regression analysis, determination tests and hypothesis testing. The test results for the board of commissioners affect disclosure of corporate risk management in banking companies listed on the Indonesia Stock Exchange for the 2018-2021 period because a significant value of 0.011 is smaller than 0.05. Ownership concentration has no effect on disclosure of company risk management in banking companies listed on the Indonesia Stock Exchange for the 2018-2021 period because a significant value of 0.331 is greater than 0.05. Audit committee meetings have an effect on disclosure of company risk management in banking companies listed on the Indonesia Stock Exchange for the 2018-2021 period because a significant value of 0.032 is smaller than 0.05. The risk management committee has an effect on disclosure of company risk management in banking companies listed on the Indonesia Stock Exchange for the 2018-2021 period because a significant value of 0.008 is smaller than 0.05. Leverage has no effect on disclosure of company risk management in banking companies listed on the Indonesia Stock Exchange for the 2018-2021 period because a significant value of 0.856 is greater than 0.05.

A non-parametric synthesize measure for corporate governance: empirical evidence from Indian banks

The purpose of the present study is to craft a corporate governance index for Indian banks by eliminating the subjectivity in assigning weights. The present framework includes six corporate governance dimensions, which include the attributes related to the board committee, audit committee, risk management committee, remuneration committee and transparency of the banks. The study considers measuring the index value for corporate governance framework via a novel extension of the classical data envelopment analysis technique known as the benefit of doubt analysis, as this approach assigns the weights objectively to the different dimensions of corporate governance and thereafter provides a synthesised score to be termed as the corporate governance index. Further, the present study attempts to know any variation in the index score when the whole sample is divided into sub-sample for two different groups in terms of duality and non-duality of CEO leadership board and other is based on the large and small size of banks. The analysis reveals that non-duality boards and small-size banks are more adaptable to the governacne norms. The analysis further documented that in an emerging economy effective implementation of governance norms is not only beneficial in protecting the interest of the shareholders but also contributes to the business performance. Thus, based on the novel analysis the study provides few policy implications in terms of identifying the key areas for an effective corporate governance framework.

Interrogative of Enterprise Risk Management Practices on the Banks’ Financial Performance in Nigeria

Deposit money banks play critical roles in any economy through their financial intermediation and their financial performance is of great importance to various stakeholders. Over the years, the banking sector has been experiencing unstable financial performance that often results in to collapse of some of the deposit money banks. Some of the challenges attributable to the banks fluctuating financial performance include the absence of adequate and effective enterprise risk management practices, unethical practices, liquidity crises and unnecessary government inferences. This has resulted in poor financial performance in terms of their Return on Assets, Tobin's Q, Net Profit margin and Earnings Per Share, among others. The study adopted an ex-post facto research design and content analysis. The population of the study was all the 12 listed deposit money banks in Nigeria in the Nigeria Exchange Group for the period 2007 – 2021. A total enumeration technique was adopted for the study. Data were sourced from the audited annual reports of the selected deposit money banks. Data were analyzed using descriptive and inferential statistics. The findings revealed that enterprise risk management has a significant effect on return on assets, Adj.R2 = 0.218, F (7, 172) = 89.01, P < 0.05). Enterprise risk management has a significant effect on Tobin's Q, Adj.R2 = 0.3367, F (7, 172) = 142.80, P < 0.05). The study concluded that enterprise risk management impacts the financial performance of deposit money banks in Nigeria. The study recommended that the Management of banks should put in place an independent Board Risk Management Committee as well as a functional Risk Management Committee with a versatile Chief Risk Officer that will ensure the effective implementation of enterprise risk management policies and processes, as its effective implementation will minimize operational, credit, market and liquidity risks, thereby enhancing banks' financial performance for the benefit of various stakeholders.

Board Committees’ Independence and Financial Performance of Listed Non-Finance Firms in Nigeria

This study examined the relationship between board committees’ independence and financial performance of listed non-finance firms in Nigeria. The specific objectives were to determine the relationship between audit committee’s independence and financial performance of listed non-finance firms in Nigeria; evaluate the relationship between risk management committee’s independence and financial performance of listed non-finance firms in Nigeria; ascertain the relationship between remuneration committee’s independence and financial performance of listed non-finance firms in Nigeria. Ex-post facto research design was adopted and the population of the study consists of all the listed non-finance firms. As of December, 2021, we had 108 non-finance firms listed on the floor of the Nigerian Exchange Group. The final sample size consists of 10 non-finance firms that were arrived at based on the availability of data for ten years for all the research variables. Findings revealed that audit committee independence significantly influence the performance of non-finance companies in Nigeria; Risk committee independence significantly influence the performance of non-finance companies in Nigeria and remuneration committee independence negatively influence the performance of non-finance companies in Nigeria. Specifically, the study concluded that only the variable of remuneration committee independence has negative but insignificant effect on firm financial performance. Furthermore, the study concluded that and increase in audit committee independence and risk management committee independence significantly increase the financial performance of listed non-finance firms in Nigeria. Based on the findings of this study, the researcher recommended that corporate boards of non-finance firms should maintain a sizeable audit committee that are dominated by non-executive directors and shareholders so as to maintain their independence as this significantly influence the firm financial performance.

Corporate Governance and Accounting Conservatism in Nigeria: An Empirical Investigation

This study investigated the effect of Corporate Governance (represented by Asymmetric Timeliness Measure and Market To Book Ratio) on accounting conservatism (represented by Gender Composition of the Board, Composition of Audit Committee and Risk Management Committee) of quoted firms in Nigeria. Ex-post facto research design was used. The population of this study comprised 17 food and beverage firms listed on the Nigerian Exchange Group (NGX) as at December 31st, 2021 from which 14 were selected by Purposive sampling technique. The study period was 10 years (2012 to 2021). Data were obtained from the published audited financial statements. The study used descriptive and inferential statistics for data analysis. Findings from the study revealed that Corporate Governance jointly had no significant effect on Asymmetric Timeliness Measure (ATM), AdjR2 = 0.035; F (6, 133) = 1.84, P-Value= 0.09 and Market To Book Ratio (MTB), AdjR2= 0.109; F = 11.70, P-Value= 0.07. This study concluded that Corporate Governance had no significant impact on Accounting Conservatism of quoted firms in Nigeria. It was recommended that policy makers should pay close attention to corporate governance policies and measures such as the Gender Composition of the Board, Composition of Audit Committee and Risk Management Committee in order to enhance accounting conservatism and bring about accounting conservatism and by extension improve the quality of financial statements.

Board characteristics and firm value: The moderating role of capital adequacy

The global financial crisis increased corporate world uncertainties. Therefore, to meet these challenges, firms take a more proactive approach to tackling various corporate governance and firm value initiatives and policies. This study aims to explore the moderating effect of capital adequacy on the relationship between board characteristics and the firm value of listed banks in Pakistan. To obtain a more robust empirical model and results, this study incorporates moderator and control variables. This study is based on half-yearly secondary data of 560 sample observations from 2009 to 2021. Multiple regression and panel data estimation techniques were employed for the analysis. The study used firm value as a dependent variable, proxied by Tobin’s Q, along with five independent variables, one moderating variable, and two control variables. The results of this study indicate that a higher capital adequacy ratio (CAR) increases firm value and has a moderating effect on board characteristics and firm value. Low proportions of women and independent directors on board affect firm value. The presence of risk management and audit committees in listed Pakistani banks, on the other hand, increases firm value. The banks in Pakistan have no problem with CEO duality. The study also found that bank size has a positive relationship with firm value, while bank age has a negative relationship with firm value.

Standalone risk management committee, risk governance diversity and Islamic bank risk-taking

Standalone risk management committee, risk governance diversity and Islamic bank risk-taking

Risk Management in Organizations: An Examination of Audit Committee Determinants and Consequences

As a result of accounting and fraud scandals, the financial crisis, and the dot com bubble, corporate governance has gained popularity. Corporate governance practices' results and corporate governance's determinants are the two primary areas of governance study. Corporate governance is often measured using indicators, specific traits, or a composite index variable. This study looked at 69 non-financial KSE-100 indexed, Karachi Stock Exchange (KSE) listed firms to determine the reasons for and effects of risk management committee and audit committee presence. A statistical program such as STATA is used in this study to calculate the fixed effect and random effect. Hausman test is also applied to the data. Only board independence, leverage, and business size were shown to be significant predictors of the presence of a separate risk management committee, whereas firm size was discovered to be a significant predictor of the presence of a separate audit committee. According to the study's findings, to safeguard investors' interests, businesses should establish a separate risk management committee and strengthen corporate governance standards. The implications of the audit committee on other accounting and financial results should be the subject of future study.

Corporate governance as antecedents and financial distress as a consequence of credit risk. Evidence from Iraqi banks

This study examines the antecedents and consequences of credit risk (CR) in Iraqi banks' context from 2011 to 2020. POLS, FEM, and REM regression estimators were used to test the hypotheses after obtaining an appropriate model. The hypotheses test findings on CR antecedents reveal that the board's financial expertise, risk management committee, and foreign ownership have a negative impact on CR. Meanwhile, the results show an insignificant effect on CR of board independence, audit committee, institutional ownership, governmental ownership, and managerial ownership. Concentrating on the consequence of CR, the results stated that CR influenced financial distress (FD) positively. Finally, ownership concentration (OC) as moderating interacts with the association between CR and financial distress. The study enhances the knowledge and implications of the theory used for corporate governance dimensions. It provides feedback to regulators and policymakers on the effectiveness of corporate governance mechanisms regarding CR control. The study also offers the Iraqi regulators and policymakers evidence of the harmful impact of CR on financial distress, necessitating their protection of bank investors from such situations by improving established credit rules and laws. This study contributes to the existing body of knowledge by investigating the antecedents and consequences of credit risk in the banking sector. This study also took a further step by examining the moderating role of ownership concentration between CR and FD.

Board risk committee composition and risk-taking of deposit money banks in Nigeria

Risk oversight by bank boards has become complex due to the evolving nature of risk and thus the need for risk committees to effectively and adequately monitor bank risktaking. The risk taking capability of a financial institution is largely a function of its risk management committee composition. While studies have examined the effect of risk committee dynamics on several organisational variables, few studies examined the relationship between risk committee composition and the risktaking behaviours of banks. However, these few studies are limited to examining the effect of the existence of a standalone risk committee. Hence, the main purpose of this study is to examine the effect of banks’ board risk committee composition on the risktaking behaviour of deposit money banks in Nigeria. The study used a sample of twelve deposit money banks listed on the Nigerian Exchange Group (NGX) from 2009 to 2020. Data were analysed using DriscollKraay’s Robust Standard Errors for Panel Regressions with Cross-Sectional Dependence (SCC) model to address heteroskedasticity and cross-sectional dependence. The results showed that risk committee independence and financial expertise reduce risk-taking. It, therefore, showed that the independence and financial expertise of the risk committee provide the needed competency and independence to effectively monitor risk-taking. The study, therefore, recommends, among others, the review of the composition of the board risk committee to reflect independence and expertise. The study differs from other studies by examining risk committee composition rather than its existence.

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

PurposeThis research aims to examine the moderating role of the existence of risk management committee between risk-taking behavior and companies’ performance.Design/methodology/approachResearch 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.FindingsThe 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/valueThis 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.

The Impact of Corporate Governance Practices on Non-Performing Loans in Iraqi Banks; The Moderating Effect of Concentrated Ownership

This study aims to examine the connection between corporate governance mechanisms and non-performing loans (NPLs) using agency theory. In addition, the study examines the moderating effect of concentrated ownership (CO) between NPLs and financial distress. The study adopts a sample of 42 Iraqi banks from 2017–2021 with 210 observations. Panel estimation utilised a regression estimator to test the research hypotheses of the study. Three regression models were used to test the hypotheses after obtaining the appropriate model. Our findings showed that non-executive directors, board financial experience, and risk management committee affected NPLs negatively. At the same time, the audit committee was an insignificant effect on NPLs. Moreover, concentrated ownership as moderating interacts with the relationship between corporate governance factors and NPLs. This study enhances the knowledge and implications of the theory used for corporate governance dimensions. It provides feedback and a map through which Iraqi regulators and decision-makers can improve the effectiveness of corporate governance practices in relation to NPLs control, which should enable Iraqi regulators and policymakers to improve the corporate governance system, especially since corporate governance is a new issue in Iraq. The study also offers the researchers, academics, regulators, and policymakers' proof of the detrimental impact of CO on NPLs since this study provided an original contribution by using CO in this position. Therefore, evaluating CO as a moderating function provides several literary and theoretical insights that can be a focusing area of future studies.