Corporate Governance and Risk Management: The Role of Risk Management and Compensation Committees

2012 ◽  
Author(s):  
Marion R. Hutchison ◽  
Tao Bich Ngoc
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Compensation Committees

Determinants of voluntary formation of risk management committees

2014 ◽  
Vol 29 (7) ◽  
pp. 649-671 ◽  
Author(s):  
Nkoko Blessy Sekome ◽  
Tesfaye Taddesse Lemma
Keyword(s):  
South Africa ◽  
Risk Management ◽  
Corporate Governance ◽  
Management Practices ◽  
Emerging Economy ◽  
Board Structure ◽  
Content Type ◽  
Listed Firms ◽  
Practical Implications

Purpose – The aim of this paper is to examine the nexus between firm-specific attributes and a company’s decision to setup a separate risk management committee (RMC) as a sub-committee of the board within the context of an emerging economy, South Africa. Design/methodology/approach – The authors analyse data extracted from audited annual financial reports of 181 non-financial firms listed on the Johannesburg Securities Exchange (JSE) by using logistic regression technique. Findings – The results show a strong positive relationship between the existence of a separate RMC and board independence, board size, firm size and industry type. However, the authors fail to find support for the hypotheses that independent board chairman, auditor reputation, reporting risk and financial leverage have an influence on a firm’s decision to establish RMC as a separately standing committee in the board structure. The findings signify the role of costs associated with information asymmetry, agency, upkeep of a standalone RMC, damage to the reputation of directors and industry-specific idiosyncrasies on a firm’s decision to form a separate RMC. Research limitations/implications – As in most empirical studies, this study focuses on listed firms. Nonetheless, future studies that focus on non-listed firms could add additional insights to the literature. Investigating the role of firm-specific governance attributes other than those considered in the present study (e.g. gender of directors, ownership structure, etc.) could further enhance the understanding of antecedents of risk-management practices. Practical implications – The findings have practical implications for the investment community in assessing the quality of risk management practices of companies listed on the JSE. Furthermore, the results provide insights that are potentially useful to the King Committee and other corporate governance regulators in South Africa in their effort to improve corporate governance practices. Originality/value – The present study focuses on firms drawn from an emerging economy which has profound economic, institutional, political and cultural differences compared to advanced economies, which have received a disproportionately higher share of attention in prior studies. Thus, the study contributes additional insights to the literature on corporate risk management from the perspective of an emerging economy.

scholarly journals CORPORATE RISK DISCLOSURE: THE EFFECT OF CORPORATE GOVERNANCE

2021 ◽  
Vol 5 (1) ◽  
pp. 101-113
Author(s):  
Arisona Ahmad ◽  
Muhammad Muhammad ◽  
Dwi Narullia
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Stock Exchange ◽  
Company Size ◽  
Business Risk ◽  
Risk Disclosure ◽  
Initial Hypothesis ◽  
Corporate Risk ◽  
Corporate Business

ABSTRACT This research investigates the role of corporate governance on the disclosure of corporate business risk management with leverage and company size as control variables. Research data were taken from a company that classified as LQ 45 on the Indonesian stock exchange from 2015 to 2018. This research finds that disclosure of business risk management as a sign that management has managed the company with the good attitude increases along with increased corporate governance activities. Leverage and company size also affect company policies regarding the disclosure of corporate business risks. Overall, the results of this study are consistent with the assumption that corporate governance affects company policies regarding business risk disclosure. However, in contrast to the initial hypothesis, the composition of the board commissioners reduces the risk management disclosure activity in the company. This is because the board of commissioners considers that business risk disclosure can increase costs and reduce its competitive advantage so that investors will respond negatively. Apart from these variables, this study contributes to agency theory, where the findings of this study indicate the confirmation of the application of theory in the context of this study. ABSTRAK Penelitian ini menyelidiki peran tata kelola perusahaan terhadap pengungkapan manajemen risiko bisnis perusahaan dengan leverage dan size perusahaan sebagai variable control. Data penelitian meliputi perusahaan yang tergolong LQ 45 di bursa efek Indonesia dari tahun 2015 hingga 2018. Penelitian ini menemukan bahwa pengungkapan manajemen risiko bisnis sebagai tanda bahwa manajemen telah berperilaku baik dalam mengelola perusahaan meningkat seiring dengan peningkatan aktivitas tata Kelola perusahaan. Leverage dan ukuran perusahaan juga mempengaruhi kebijakan perusahaan mengenai pengungkapan risiko bisnis perusahaan. Secara keseluruhan, hasil penelitian ini konsisten dengan dugaan bahwa tata kelola perusahaan mempengaruhi kebijakan perusahaan mengenai pengungkapan risiko bisnis. Namun, berbeda dengan hipotesis awal komposisi dewan komisaris menurunkan aktivitas pengungkapan manajemen risiko diperusahaan. Hal ini dikarenakan dewan komisaris menimbang bahwa pengungkapan risiko bisnis dapat meningkatkan biaya serta menurunkan keunggulan kompetitif perusahaan sehingga akan direspon negatif oleh investor. Selain variabel tersebut, penelitian ini berkontribusi pada teori agensi dimana temuan yang ada menunjukkan konfirmasi dari penerapan teori di dalam konteks penelitian.

scholarly journals Can compensation committees effectively mitigate the CEO horizon problem? The role of co-opted directors

2020 ◽  
Vol 34 (1) ◽  
pp. 1-21
Author(s):  
Ruonan Liu
Keyword(s):  
Corporate Governance ◽  
Research And Development ◽  
Empirical Evidence ◽  
Design Methodology ◽  
Ceo Compensation ◽  
Content Type ◽  
Horizon Problem ◽  
Accruals Management ◽  
Compensation Committees

Purpose This study aims to examine whether compensation committees dominated by co-opted directors are less effective in mitigating the CEO horizon problem. Design/methodology/approach The author uses a sample of 7,280 firm-year observations from 1998 to 2011. Findings In this study, the author finds evidence of opportunistic research and development (R&D) reduction and accruals management in firms with retiring CEOs and compensation committees dominated by co-opted directors. Moreover, it is found that R&D reduction and income-increasing accruals are less discouraged when determining the compensation for retiring CEOs by compensation committees that are dominated by co-opted directors. The results suggest that compensation committees dominated by co-opted directors are less effective in adjusting CEO compensation to mitigate the CEO horizon problem. Originality/value The study reveals that co-opted directors are weak monitors. Moreover, the study adds empirical evidence to the debate of organizations’ CEO horizon problem. Finally, the study adds to the literature on corporate governance, revealing that compensation committees play an important role in mitigating an organization’s CEO horizon problem by adjusting CEO compensation.

Valences of the Corporate Governance in the Process of Accounting Reporting

2019 ◽  
pp. 145-166 ◽  
Author(s):  
Tatiana Dănescu ◽  
Mihaela Prozan
Keyword(s):  
Risk Factors ◽  
Decision Making ◽  
Risk Management ◽  
Corporate Governance ◽  
Global Economy ◽  
Accounting Information ◽  
Reliable Information ◽  
Professional Organizations ◽  
Prospective Risk

In the context of the issues that the global economy is facing, one of the main concerns of the regulative authorities, of the professional organizations, and of entities was and still is identifying the risk factors that affect the systems of corporative governance and the systems and processes through which the supply of reliable information in the decision-making process is insured. Another concern is identifying reliable solutions for insuring the implementation of a proactive and prospective risk management that makes a mark on the utility of the information presented and communicated to the targeted users, especially through accounting reporting. Hence, through the necessity of insuring the transparency and the utility of accounting information, in this chapter, the role of corporate governance, in improving the process of accounting reporting and as a consequence of the value of accounting information, will be synthetically presented.

The Role of Internal Audit in Governance of Zakat Institution in Malaysia

2021 ◽  
Vol 12 (3) ◽  
pp. 2568-2571
Author(s):  
Suhaimi Ishak Et.al
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Best Practice ◽  
Good Governance ◽  
Internal Audit ◽  
The State ◽  
Federal Constitution ◽  
State Administration ◽  
A Company

This study outlines the role of internal audit in the governance of zakat institutions in Malaysia. Aspects of internal audit are detailed in this study as well as risk management. Internal audit is closely linked to risk management where both of these aspects are an important element of an organisation's governance. In addition, legislative matters such as the Federal Constitution and the State Administration of Islamic Religious Enactments were also discussed in this research. Researchers are also talking about the Malaysian Code on Corporate Governance (MCCG), which can be used as a guide and best practice for Islamic religious states and zakat institutions in Malaysia. Although the Islamic religious councils of the states and the zakat institutions are not a company but with the trust as administrators and managers of large zakat funds, the need for good governance is essential.

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