Enterprise risk management and investment efficiency: Australian evidence from risk management committees

Haiyan Jiang, Jing Jia and Larelle (Ellie) Chapple
Additional contact information
Haiyan Jiang: Department of Accounting and Corporate Governance, Macquarie University, Sydney, NSW, Australia
Jing Jia: School of Business and Economics, University of Tasmania, Australia
Larelle (Ellie) Chapple: QUT Business School, Queensland University of Technology, Brisbane, QLD, Australia

Australian Journal of Management, 2024, vol. 49, issue 3, 366-402

Abstract: This study investigates whether and how effective risk management committees (RMCs) improve corporate investment efficiency. Using a sample of listed companies included in the Australian Securities Exchange (ASX) 300 index, we document that effective RMCs improve investments’ sensitivity to growth opportunities and profitability. The results also reveal that effective RMCs enhance corporate investment efficiency by restricting not only over- but also underinvestment. Subsequent analyses demonstrate that the positive effect of RMCs on investment efficiency is due to the reduced information asymmetry and free cash flow problems. Furthermore, we find a more pronounced effect of RMCs on investment efficiency when companies experience a high level of economic policy uncertainty (EPU) and financial constraint. JEL Classifications: G14, G34, M41

Keywords: Economic policy uncertainty; financial constraint; investment efficiency; risk management committee (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/03128962221144513 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:ausman:v:49:y:2024:i:3:p:366-402

DOI: 10.1177/03128962221144513

Access Statistics for this article

More articles in Australian Journal of Management from Australian School of Business
Bibliographic data for series maintained by SAGE Publications ().