Board structures and the establishment of a risk management committee by Malaysian listed firms

Research output: Contribution to journalArticle

31 Citations (Scopus)

Abstract

The purpose of this study is to examine the association between the establishment of a risk management committee and board structures of Malaysian listed firms. The study predicts that more independent, expert, and diligent boards are likely to establish a stand-alone risk management committee. It employs a cross-sectional analysis of 690 firms listed on the Bursa Malaysia for the financial year ending in 2003. Multiple regression analysis is used to estimate the relationships proposed in the hypotheses. The study finds a strong support for an association between the establishment of a risk management committee and strong board structures. Specifically, the result shows that firms with higher proportions of non-executive directors on boards and firms that separate the positions of chief executive officers and board chairs are likely to set up a stand-alone risk management committee. Firms with greater board expertise and board diligence are also likely to establish a risk management committee. These findings suggest that stronger boards demonstrate their commitment to and awareness of improved internal control environment. Finally, the study also documents a positive and significant association between firm size, complexity of a firm's operations, and the use of Big Four audit firms with the establishment of a risk management committee.

Original languageEnglish
Pages (from-to)17-36
Number of pages20
JournalJournal of Management and Governance
Volume14
Issue number1
DOIs
Publication statusPublished - Jan 2009

Fingerprint

Risk management
Board structure
Internal control
Cross-sectional analysis
Chief executive officer
Proportion
Multiple regression analysis
Firm size
Malaysia
Expertise
Non-executive directors
Audit firms

Keywords

  • Boards of directors
  • Corporate governance
  • Internal control
  • Malaysian companies
  • Risk management

ASJC Scopus subject areas

  • Business and International Management

Cite this

Board structures and the establishment of a risk management committee by Malaysian listed firms. / Yatim, Puan.

In: Journal of Management and Governance, Vol. 14, No. 1, 01.2009, p. 17-36.

Research output: Contribution to journalArticle

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