Enterprise risk management and investment efficiency: Australian evidence from risk management committees-Reference-Cited by-同舟云学术

Enterprise risk management and investment efficiency: Australian evidence from risk management committees

Published:2023-01-03 Issue: Volume: Page:031289622211445
ISSN:0312-8962
Container-title:Australian Journal of Management
language:en
Short-container-title:Australian Journal of Management

Author:

Jiang Haiyan¹,Jia Jing²^ORCID,(Ellie) Chapple Larelle³^ORCID

Affiliation:

1. Department of Accounting and Corporate Governance, Macquarie University, Sydney, NSW, Australia

2. School of Business and Economics, University of Tasmania, Australia

3. QUT Business School, Queensland University of Technology, Brisbane, QLD, Australia

Abstract

This study investigates whether and how effective risk management committees (RMCs) improve corporate investment efficiency. Using a sample of listed companies included in the Australian Securities Exchange (ASX) 300 index, we document that effective RMCs improve investments’ sensitivity to growth opportunities and profitability. The results also reveal that effective RMCs enhance corporate investment efficiency by restricting not only over- but also underinvestment. Subsequent analyses demonstrate that the positive effect of RMCs on investment efficiency is due to the reduced information asymmetry and free cash flow problems. Furthermore, we find a more pronounced effect of RMCs on investment efficiency when companies experience a high level of economic policy uncertainty (EPU) and financial constraint. JEL Classifications: G14, G34, M41

Publisher

SAGE Publications

Subject

General Business, Management and Accounting

Link

http://journals.sagepub.com/doi/pdf/10.1177/03128962221144513

Reference63 articles.

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2. Australian Securities Exchange (ASX) (2017) S&P/ASX 300 index. Available at: https://www.asx.com.au/products/capitalisation-indices.htm#sp_asx_300_index