The Effect of Risk Management Committee Characteristics on Firm Performance: An Empirical Investigation

Ahmad A. Toumeh

Indian Journal of Corporate Governance, 2023, vol. 16, issue 2, 323-342

Abstract: This research investigates how the characteristics of a risk management committee (RMC), as a recently emerging sub-committee within the board of directors, impact firm performance indicators. The investigation employs a dataset encompassing service and manufacturing firms that are listed on the Amman Stock Exchange (ASE) over the period 2019–2022, comprising a total of 236 firm-year observations. The primary statistical technique utilised in the study is fixed-effect regression with Huber–White standard errors. The findings demonstrate that RMC attributes such as size, independence and meeting frequency exert a significant and positive effect on return on assets, return on equity and Tobin’s Q. These insights hold practical implications for stakeholders, regulators and policymakers in assessing the influence of RMC characteristics on firm performance within the context of the ASE. Understanding these dynamics can inform decision-making and regulatory frameworks, promoting effective risk management practices in publicly traded corporations. The current study represents the initial empirical exploration within the corporate governance literature concerning the nexus between RMC qualities and firm performance in Jordan.

Keywords: Agency theory; corporate governance code; firm performance; Jordan; risk management committee; signalling theory (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:sae:ijcgvn:v:16:y:2023:i:2:p:323-342

DOI: 10.1177/09746862231213422

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