TY - JOUR

T1 - Risk committee characteristics and risk disclosure in banks: evidence from an emerging economy

AU - Hasan , Arshad

AU - Sufi , Usman

AU - Hussainey, Khaled

PY - 2023/10/30

Y1 - 2023/10/30

N2 - PurposeThis study aims to investigate the impact of risk committee characteristics on the risk disclosure of banking institutions in an emerging economy, Pakistan.Design/methodology/approachThe data are collected through a manual content analysis of 21 banks regulated by the State Bank of Pakistan over the period 2011–2020. The study utilizes the generalized least square (GLS) regression model as the method of analysis.FindingsThe study finds that risk committee size is positively associated with risk disclosure, which is in line with agency theory. However, risk committee independence and risk committee gender diversity are negatively associated with risk disclosure. This contradicts the theoretical perspective and is explained by the weak regulatory framework of Pakistan.Research limitations/implicationsThis study was carried out in a single research setting, which limits the generalizability of its findings to other developed and emerging economies.Practical implicationsThe results provide valuable insights for regulators by identifying the attributes that require regulatory focus to strengthen risk committees and enhance risk disclosure practices within the banking sector of Pakistan. The findings highlight the effectiveness of the risk committee size, call for fully independent risk committees and encourage greater representation of women in these committees.Originality/valueThis study contributes to the corporate governance literature by empirically examining the risk committee characteristics and their impact on the risk disclosure of banks in an emerging economy. Moreover, this study contributes to theory by utilizing upper echelon theory in addition to agency theory as the motivation for the study.

AB - PurposeThis study aims to investigate the impact of risk committee characteristics on the risk disclosure of banking institutions in an emerging economy, Pakistan.Design/methodology/approachThe data are collected through a manual content analysis of 21 banks regulated by the State Bank of Pakistan over the period 2011–2020. The study utilizes the generalized least square (GLS) regression model as the method of analysis.FindingsThe study finds that risk committee size is positively associated with risk disclosure, which is in line with agency theory. However, risk committee independence and risk committee gender diversity are negatively associated with risk disclosure. This contradicts the theoretical perspective and is explained by the weak regulatory framework of Pakistan.Research limitations/implicationsThis study was carried out in a single research setting, which limits the generalizability of its findings to other developed and emerging economies.Practical implicationsThe results provide valuable insights for regulators by identifying the attributes that require regulatory focus to strengthen risk committees and enhance risk disclosure practices within the banking sector of Pakistan. The findings highlight the effectiveness of the risk committee size, call for fully independent risk committees and encourage greater representation of women in these committees.Originality/valueThis study contributes to the corporate governance literature by empirically examining the risk committee characteristics and their impact on the risk disclosure of banks in an emerging economy. Moreover, this study contributes to theory by utilizing upper echelon theory in addition to agency theory as the motivation for the study.

M3 - Article

JO - Journal of Applied Accounting Research

JF - Journal of Applied Accounting Research

SN - 0967-5426

ER -