The effect of risk management committee characteristics on a company’s performance in an emerging country

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Abstract

This paper aimed at providing evidence regarding risk management committee (RMC) characteristics’ effect on a company’s performance in an emerging country, specifically Jordan. This is done using a sample of 190 non-financial companies (NFCs) that were listed on the Amman Stock Exchange (ASE) between 2018 and 2021. This study used descriptive statistics, regression, and correlation models to perform the data analysis and test hypotheses. Precisely, this study examines the association between business performance presented by return on assets (ROA) and the following RMC traits: size, competence, independence, non-executive, and frequency of meetings, controlled by firm size, and leverage (Shatnawi et al., 2020; Jia & Bradbury, 2021). Data required to test hypotheses are available on the website of the Securities Depository Center (SDC). The findings of this study show that all the above traits are positively associated with ROA except for the frequency of meetings which has a negative but not significant relationship. Furthermore, the regression findings indicated a negative relationship between leverage and performance. No evidence of any association between RMC and the company size. To the best of the author’s knowledge, this study is one of the first studies that present and sheds more light on the concept of RMC in Jordan. This study provides important policy implications and recommendations for regulators authorities, boards, and policymakers in Jordan regarding these attributes to design a risk governance structure of the NFCs.

Keywords: Company, Performance, RMC, Jordan, Risk Committee

Authors’ individual contribution: The Author is responsible for all the contributions to the paper according to CRediT (Contributor Roles Taxonomy) standards.

Declaration of conflicting interests: The Author declares that there is no conflict of interest.

JEL Classification: M40, M41, M48, G30, G32, G38, L25

Received: 06.09.2022
Accepted: 27.03.2023
Published online: 31.03.2023

How to cite this paper: Alduneibat, K. A. (2023). The effect of risk management committee characteristics on a company’s performance in an emerging country [Special issue]. Journal of Governance & Regulation, 12(1), 376–386. https://doi.org/10.22495/jgrv12i1siart16