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The existence and nature of risk management committees in Australian companies

conference contribution
posted on 2007-01-01, 00:00 authored by J Zhang, Navaneetham Subramaniam, L McManus
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. Using an agency theory perspective, this study investigates the association between board factors such as proportion of non-executive directors, CEO duality, and board size; as well as, other firm-related factors (e.g. auditor type, industry, leverage, and complexity), and (1) the existence of a RMC, and (2) 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 ASX-listed companies. 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. The findings of this study provide additional information on the use and design of RMCs in a voluntary setting.

History

Event

Accounting and Finance Association of Australia and New Zealand. Conference (2007 : Gold Coast, Qld.)

Pagination

1 - 36

Publisher

[Accounting and Finance Association of Australia and New Zealand]

Location

Gold Coast, Qld.

Place of publication

[Gold Coast, Qld]

Start date

2007-07-01

End date

2007-07-03

Language

eng

Publication classification

E3.1 Extract of paper

Title of proceedings

AFAANZ 2007 : Accounting and Finance Association of Australia and New Zealand Annual Conference

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