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

Subramaniam, Nava, McManus, Lisa and Zhang, Jiani 2009, Corporate governance, firm characteristics and risk management committee formation in Australian companies, Managerial auditing journal, vol. 24, no. 4, pp. 316-339.

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Title Corporate governance, firm characteristics and risk management committee formation in Australian companies
Author(s) Subramaniam, Nava
McManus, Lisa
Zhang, Jiani
Journal name Managerial auditing journal
Volume number 24
Issue number 4
Start page 316
End page 339
Publisher MCB University Press
Place of publication Bradford, England
Publication date 2009
ISSN 0268-6902
1758-7735
Keyword(s) Australia
corporate governance
risk management
Summary 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.
Language eng
Field of Research 150303 Corporate Governance and Stakeholder Engagement
150205 Investment and Risk Management
HERDC Research category C1 Refereed article in a scholarly journal
ERA Research output type C Journal article
Copyright notice ©2009, Emerald
Persistent URL http://hdl.handle.net/10536/DRO/DU:30018550

Document type: Journal Article
Collection: School of Accounting, Economics and Finance
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Created: Tue, 08 Sep 2009, 14:05:24 EST by Rachael Mackenzie