Risk Management in Organizations: An Examination of Audit Committee Determinants and Consequences

Abstract

As a result of accounting and fraud scandals, the financial crisis, and the dot com bubble, corporate governance has gained popularity. Corporate governance practices' results and corporate governance's determinants are the two primary areas of governance study. Corporate governance is often measured using indicators, specific traits, or a composite index variable. This study looked at 69 non-financial KSE-100 indexed, Karachi Stock Exchange (KSE) listed firms to determine the reasons for and effects of risk management committee and audit committee presence. A statistical program such as STATA is used in this study to calculate the fixed effect and random effect. Hausman test is also applied to the data. Only board independence, leverage, and business size were shown to be significant predictors of the presence of a separate risk management committee, whereas firm size was discovered to be a significant predictor of the presence of a separate audit committee. According to the study's findings, to safeguard investors' interests, businesses should establish a separate risk management committee and strengthen corporate governance standards. The implications of the audit committee on other accounting and financial results should be the subject of future study.