Malaysian risk management committees and firms’ financial performance / Roslida Ramlee and Normah Ahmad

Ramlee, Roslida and Ahmad, Normah (2020) Malaysian risk management committees and firms’ financial performance / Roslida Ramlee and Normah Ahmad. Asia-Pacific Management Accounting Journal, 15 (2): 7. pp. 147-167. ISSN 2550-1631


The establishment of a risk management committee (RMC) as a board committee is mandatory for finance firms in Malaysia. But for firms in the non-finance sector, the practice is still voluntary. This study examined (1) the roles and responsibilities of RMC on Malaysian non-finance firms and (2) the relationship between RMC and firms’ financial performance. The data collected were from the corporate annual reports and for the period 2009 – 2016. Firms’ financial performance was measured by return on assets (ROA), return on equity (ROE) and Tobin’s Q. The RMC were proxied by five (5) characteristics: its size, its independence, the existence of CEO/ COO/CRO/CFO on RMC, their knowledge and expertise, and frequency of RMC meetings. The data were analyzed using the Panel Data Analysis Stata13. This study found that the responsibilities of RMC vary from simple reviewing and risk categorizing to approving risk strategies, reporting to the board of directors and providing assurance on the risk management process. This study showed that the existence of CEO/COO/CRO/CFO on RMC and their knowledge and expertise are associated with firms’ financial performance. This study concluded that though RMC in non-finance firms is a voluntary practice, their establishment is one of the important strategies of corporate governance reform.


Item Type: Article
Email / ID Num.
Ramlee, Roslida
Ahmad, Normah
Subjects: H Social Sciences > HD Industries. Land use. Labor > Risk management. Risk in industry. Operational risk
H Social Sciences > HG Finance > Financial management. Business finance. Corporation finance
Divisions: Universiti Teknologi MARA, Shah Alam > Accounting Research Institute (ARI)
Journal or Publication Title: Asia-Pacific Management Accounting Journal
UiTM Journal Collections: UiTM Journal > Asia-Pacific Management Accounting Journal (APMAJ)
ISSN: 2550-1631
Volume: 15
Number: 2
Page Range: pp. 147-167
Keywords: RMC; corporate governance; Malaysia
Date: August 2020
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