Risk management committees and firm performance

Jing Jia and Michael E Bradbury
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Jing Jia: Tasmanian School of Business and Economics, University of Tasmania, Hobart, TAS, Australia
Michael E Bradbury: School of Accountancy, Massey University, Albany, New Zealand

Australian Journal of Management, 2021, vol. 46, issue 3, 369-388

Abstract: Risk management committees (RMCs) are recognised as a key corporate governance mechanism for controlling corporate risk. We examine the performance of RMCs in Australia over the period 2007–2014. We identify three performance measures related to the function of the RMC: the probability of financial distress, growth options (market to book) and return on assets. We find that firms with an RMC perform better than other firms. We also find that firms with a separately constituted RMC perform better, relative to firms where the risk management activities are absorbed into an existing committee. JEL classification: G32, G33, G34, G38

Keywords: Comply or explain; corporate governance; firm performance; global financial crisis; risk management committees (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:sae:ausman:v:46:y:2021:i:3:p:369-388

DOI: 10.1177/0312896220959124

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