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Risk management committees and firm performance

Author

Listed:
  • Jing Jia

    (Tasmanian School of Business and Economics, University of Tasmania, Hobart, TAS, Australia)

  • Michael E Bradbury

    (School of Accountancy, Massey University, Albany, New Zealand)

Abstract

Risk management committees (RMCs) are recognised as a key corporate governance mechanism for controlling corporate risk. We examine the performance of RMCs in Australia over the period 2007–2014. We identify three performance measures related to the function of the RMC: the probability of financial distress, growth options (market to book) and return on assets. We find that firms with an RMC perform better than other firms. We also find that firms with a separately constituted RMC perform better, relative to firms where the risk management activities are absorbed into an existing committee. JEL classification: G32, G33, G34, G38

Suggested Citation

  • Jing Jia & Michael E Bradbury, 2021. "Risk management committees and firm performance," Australian Journal of Management, Australian School of Business, vol. 46(3), pages 369-388, August.
    • Handle: RePEc:sae:ausman:v:46:y:2021:i:3:p:369-388
    DOI: 10.1177/0312896220959124
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    More about this item

    Keywords

    Comply or explain; corporate governance; firm performance; global financial crisis; risk management committees;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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