Author:
Umar Umar Habibu,Abduh Muhamad,Besar Mohd Hairul Azrin
Abstract
Purpose
This study aims to investigate the relationship between audit committee (AC) attributes and the risk-taking behavior of Islamic banks.
Design/methodology/approach
The study used data generated from the annual reports of 43 full-fledged Islamic banks operating in 15 countries between 2010 and 2020.
Findings
The findings indicate that AC size, AC independence and the proportion of AC members from foreign countries have a significant negative relationship with the risk-taking of Islamic banks. However, AC meetings, AC gender diversity and the proportion of AC members with doctorate degrees have insignificantly influenced the risk-taking of Islamic banks.
Research limitations/implications
The study used only six AC attributes out of corporate governance mechanisms likely to affect the insolvency risk of full-fledged Islamic banks between 2010 and 2020.
Practical implications
The study sheds light on the effects of AC attributes on the risk-taking of Islamic banks. The findings could allow policymakers and regulators to provide policies and regulations that could improve AC’s oversight role in constraining Islamic banks from excessive risk-taking. Besides, this study can guide the board of directors in appointing AC members who can prevent Islamic banks from taking excessive risks.
Originality/value
This study provides clear and adequate empirical evidence showing how key audit committee attributes influence the risk-taking behavior of full-fledged Islamic banks.
Subject
Strategy and Management,Accounting,Business and International Management
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