The Comparative Moderating Effect of Risk Management Committee and Audit Committee on the Association Between Voluntary Risk Management Disclosure and Firm Performance

Abstract

The purpose of this study is to examine the comparative moderating effects of two separate risk governance mechanisms on the relationship between voluntary risk management disclosure (VRMD) and firm performance (FP). This study utilizes content analysis method to collect VRMD data, while FP is measured based on investors’ perspective, represented by Tobin’s Q. Multivariate statistical tests show that the existence of Risk Management Committee (RMC) augmented the association between VRMD and FP. However, the appointment of audit committee (AC) and the quality of AC which are represented by size, independence, education and number of AC meetings, do not have any moderating effect on the relationship between VRMD and FP. The findings suggest that risk governance mechanisms do matter to investors in evaluating risk management information. The findings also provide empirical evidence that should be of interest to the management of company and regulatory bodies in terms of deciding upon whether or not to establish RMC as a separate committee from AC. Keywords: Risk management committee; audit committee; risk governance; voluntary risk management disclosure; non-financial Industry ABSTRAK Tujuan kajian ini adalah untuk mengkaji kesan penyederhana secara komparatif dua mekanisme tadbir urus risiko terhadap hubungan antara pendedahan maklumat sukarela pengurusan risiko (PMSPR) dan prestasi syarikat (PS). Kajian ini menggunakan kaedah analisis kandungan untuk mengumpul data PMSPR, manakala PS diukur berdasarkan perspektif pelabur, yang diwakili oleh Tobin’s Q. Ujian statistik multivariat menunjukkan bahawa kewujudan Jawatankuasa Pengurusan Risiko (JPR) meningkatkan hubungan antara PMSPR dan PS. Walau bagaimanapun, perlantikan Jawatankuasa Audit (JA) dan kualiti JA yang diwakili oleh saiz, kebebasan, pendidikan dan bilangan mesyuarat JA tidak mempunyai kesan penyederhana terhadap hubungan PMSPR dan PS. Dapatan kajian ini menunjukkan bahawa mekanisme tadbir urus risiko adalah penting kepada pelabur dalam menilai maklumat pengurusan risiko. Dapatan ini juga memberikan bukti empirikal kepada pihak pengurusan syarikat dan badan pengawalseliaan dari segi penentuan sama ada untuk menubuhkan JPR atau tidak secara berasingan daripada JA. Kata kunci: Jawatankuasa pengurusan risiko; jawatankuasa audit; tadbir urus risiko; pendedahan maklumat sukarela pengurusan risiko; industri bukan kewangan

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