Corporate Governance, Firm Characteristics and Risk Management Committee Formation in Australian Companies

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Title Corporate Governance, Firm Characteristics and Risk Management Committee Formation in Australian Companies
Author Subramaniam, Nava; McManus, Lisa Ann; Zhang, Jian
Journal Name Managerial Auditing Journal
Year Published 2009
Place of publication Melbourne
Publisher Emerald
Abstract Purpose - A risk management committee (RMC), as a newly evolving sub-committee of the board of directors, functions as a key governance support mechanism in the oversight an organisation's risk management strategies, policies and processes. However, empirical evidence on the factors associated with the existence and the type of RMCs remains scant. Design/Methodology/Approach - Using an agency theory perspective, this study investigates the association between board factors such as proportion of non-executive directors, CEO duality, and board size; as well as, other firm-related factors (e.g. auditor type, industry, leverage, and complexity), and (1) the existence of a RMC, and (2) the type of RMC (namely, a separate RMC versus one that is combined with the audit committee). Data was collected from the annual reports of the top 300 ASX-listed companies. Findings - The results, based on logistic regression analyses, indicate that RMCs tend to exist in companies with an independent board chairman and larger boards. Further, the results also indicate that in comparison to companies with a combined RMC and audit committee, those with a separate RMC are more likely to have larger boards, higher financial reporting risk and lower organisational complexity. Research limitations / Implications – Data limited to top 200 top ASX-listed companies, thus restricting generalisability of the results Originality / Value - The findings of this study provide additional information on the use and design of RMCs in a voluntary setting.
Peer Reviewed Yes
Published Yes
Alternative URI http://dx.doi.org/10.1108/02686900910948170
Volume 24
Issue Number 4
Page from 316
Page to 339
ISSN 0268-6902
Date Accessioned 2009-07-02
Date Available 2010-01-28T05:29:28Z
Language en_AU
Research Centre Griffith Institute For Tourism
Faculty Griffith Business School
Subject Auditing and Accountability
URI http://hdl.handle.net/10072/28501
Publication Type Journal Articles (Refereed Article)
Publication Type Code c1

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