Do risk management committee characteristics influence the market value of firms?

• Published in: Risk management (Leicestershire, England) Vol. 23; no. 1-2; pp. 172 - 191
• Main Authors: Malik, Masturah, Shafie, Rohami, Ku Ismail, Ku Nor Izah
• Format: Journal Article
• Language: English
• Published: London Palgrave Macmillan UK 01.06.2021; Palgrave Macmillan
• Subjects: Accounting; Banking; Boards of directors; Committees; Companies; Corporate governance; Economics and Finance; Enterprise risk management; Experts; Females; Finance; Financial institutions; Internal auditors; Market value; Measurement; Organizational performance; Original Article; Risk Management; Stock exchanges; Tokenism; Firm performance; Corporate governance; Risk management; Risk management committee (RMC)
• ISSN: 1460-3799; 1743-4637
• DOI: 10.1057/s41283-021-00073-8

This study aims to examine the effects of the risk management committee’s characteristics on the market performance of non-financial listed firms in Malaysia between 2015 and 2017. The regression result shows that risk management committee (RMC) size, independence, expertise and female RMC members have a substantial negative influence on firm performance. By employing a different measurement of expertise, further analysis shows that RMC members with risk management expertise have a significantly positive relationship with firm performance. The results suggest that RMC members with specific risk management expertise can promote efficient risk monitoring, thus, enhancing the value of firms compared to RMC members with only general financial and accounting backgrounds. Nevertheless, the results are the same for the female members of the RMC even though different measurements are used. The robust negative result is supported by the tokenism interpretation for female members in the risk management committee.