The role of risk management committee between risk-taking behavior and companies’ performance

Masculine Muhammad Muqorobin, Utpala Rani and Alex Johanes Simamora

International Journal of Productivity and Performance Management, 2023, vol. 73, issue 3, 817-836

Abstract: Purpose - This research aims to examine the moderating role of the existence of risk management committee between risk-taking behavior and companies’ performance. Design/methodology/approach - Research sample includes 383 manufacturing company-year that listed on the Indonesian Stock Exchange period of 2017–2020. The risk-taking behavior includes the use of leverage, capital intensity, research and development intensity, and earnings uncertainty. The hypothesis test uses company fixed-effect regression. Findings - The result shows that risk management committee moderates the effect of risk-taking behavior on companies’ performance. This research also finds the similar result when risk management committee and risk-taking behavior are examined on the future performance. In the further analysis, the result also finds that the expertise of risk management committee moderates the effect of risk-taking behavior on companies’ performance. Originality/value - This research contributes to fill the previous gap of risk-taking behavior and companies’ performance by considering the existence of risk management committee to promote oversight role on risk-taking behavior. This research also contributes to give new evidence in Indonesia about the role of risk management committee to improve the benefits or to reduce the costs of risk-taking behavior.

Keywords: Risk-taking behavior; Companies’ performance; Risk management committee (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijppmp:ijppm-07-2022-0347

DOI: 10.1108/IJPPM-07-2022-0347

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