Overlapping membership between risk management committee and audit committee and bank risk-taking: Evidence from China

Bin Yan Ding and Feng Wei

International Review of Financial Analysis, 2023, vol. 86, issue C

Abstract: Although overlapping membership between risk management committee and audit committee is prevalent in banks' boards, the existing literature focuses on the impact of a single board committee on bank risk-taking. Using a sample of Chinese listed banks from 2007 to 2020, we examine whether and how overlapping membership between risk management committee and audit committee influences bank risk-taking. The results show that overlapping membership between risk management committee and audit committee reduces bank risk-taking. Furthermore, the risk-averse role of overlapping membership between risk management committee and audit committee is stronger in banks with weaker monitoring intensity and higher information acquisition costs. When exploring the potential channels of monitoring and information, we find that overlapping membership between risk management committee and audit committee helps reduce executive earnings management and make conservative interbank liability decisions. Finally, compared with other overlapping member characteristics, the role of overlapping risk management committee chair and financial experts in reducing bank risk-taking is more evident.

Keywords: Bank risk-taking; Risk management committee; Audit committee; Overlapping membership (search for similar items in EconPapers)
JEL-codes: G21 G30 G34 M4 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:86:y:2023:i:c:s1057521923000170

DOI: 10.1016/j.irfa.2023.102501

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