Nexus between audit committee and corporate risk: evidence from Pakistan

Noor, Amna; Farooq, Muhammad; Tahir, Zonaib

doi:10.1108/cg-11-2021-0418

Cited by 4 publications

(10 citation statements)

References 78 publications

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“…Feng et al (2021) find a higher market valuation of cash holding for firms evaluated by industry authority examiners. Similar findings are supported by Noor et al (2022) and Ullah et al (2019). Gong et al (2019) found that industry pro auditor decreases power and snugness of obligation.…”

Section: Introductionsupporting

confidence: 74%

Impact of Audit Quality on Stock Price Crash Risk: Evidence from Pakistan Stock Exchange

et al. 2022

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Stock price crash risk is an unfavourable event in business that may decrease the shareholder’s wealth and hurt stability and capital market growth. This study investigates the impact of audit quality measured by auditor industry specialization (AIS), audit tenure (AT), audit committee independence (ACI), audit firm size(AFS)) on stock value crash (measured by down-to-up unpredictability) for a sample of 70 non-financial firms listed in Pakistan Stock Exchange during from 2009 to 2018. Efficient governance enriches financial and operational directness, which cuts down the stock value crashes in rotation. Facing crash risk difficulties, traders impart more funds to stocks of well-regime organizations. The fixed effect model results show that AIS and ACI have a negative and significant impact on crash risk, while there is a positive impact of AFS on stock price crash risk. Moreover, it concludes that it has an insignificant impact on stock price crash risk in Pakistan. It is concluded that effective audit quality lessens the difficulty of data abnormality and improves stock price crash risk. This study has importance for investors to help them identify the most liquid stock and will enable them to decide which stocks to acquire and which to dispose of. This study will also be helpful for academics and scholars to bridge this gap on the influence of audit quality practices on the economic consequences of Pakistan. It will be useful for future research as well as because it will become part of the empirical literature on the economic consequence of stock markets.

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Section: Introductionsupporting

confidence: 74%

Impact of Audit Quality on Stock Price Crash Risk: Evidence from Pakistan Stock Exchange

et al. 2022

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“…(2016), who suggest that gender diversity in the subcommittees may also be a formality. In addition, Noor et al. (2022) contend that minimal representation of women, especially in subcommittees, makes gender diversity insignificant or even negative relevant to disclosure.…”

Section: Resultsmentioning

confidence: 99%

“…In contrast, there have been banks that have had more than one female member on the overall board. Therefore, the explanations of Noor et al. (2022) and Chijoke-Mgbame et al.…”

Section: Resultsmentioning

confidence: 99%

“…For instance, Salem et al (2019) and Raimo et al (2022) both find empirical evidence of board gender diversity improving risk disclosure. Interestingly, there has also been empirical evidence of gender diversity being insignificant or even negatively impacting risk disclosure (Allini et al, 2014;Noor et al, 2022). For instance, Noor et al (2022) prove by an empirical analysis of Pakistani firms that audit committee gender diversity is insignificant relevant to the efficient oversight of risk.…”

Section: 23mentioning

confidence: 99%

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

Hasan

Sufi

Hussainey

2023

JAAR

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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.

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“…All models are subjected to multiple regression analysis using the fixed-effect method, which was chosen based on the panel data model selection test (Gujarati and Porter, 2009;Wooldridge, 2016). The fixed-effect method yields the most efficient estimation, as shown in the results in Appendix 2 (Gujarati and Porter, 2009;Arora and Sharma, 2016;Wooldridge, 2016;Mayur and Saravanan, 2017;Santos et al, 2019;Barros et al, 2020;Tahir et al, 2020;Tran, 2021;Khursheed and Sheikh, 2022;Noor et al, 2022). In addition, we also applied a robust standard error to all the models (Koester et al, 2016) and to all the regression analyses because there were pieces of evidence that the residual of the models suffered from non-normality, heteroscedasticity and autocorrelation (in Appendices 3 and 4).…”

Section: Discussionmentioning

confidence: 99%

The impact of managerial ability on corporate tax risk and long-run tax avoidance: empirical evidence from a developing country

Saragih

Ali

2023

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Purpose The purpose of this study is to examine the impact of managerial ability on corporate tax risk and long-term tax avoidance using the upper echelons theory. Design/methodology/approach This study uses a quantitative method with regression models, using a sample of listed firms on the Indonesia Stock Exchange from 2011 to 2018. Findings The regression results report that managerial ability negatively influences tax risk and positively impacts long-run tax avoidance. Companies with more able managers have a relatively lower tax risk and greater long-run tax avoidance. The results reveal that firms with managers that possess greater abilities are more committed to long-run tax avoidance while concurrently maintaining a lower level of their tax risk. The impacts the authors report are statistically significant and robust, as proved by a series of robustness checks and additional tests. Research limitations/implications This study only includes firms from one developing country. Practical implications The empirical results might be of interest to board members while envisaging the benefits and costs of appointing and hiring managers, as well as to the tax authority and the other stakeholders interested in apprehending how managerial ability influences corporate tax risk and long-run tax avoidance practices simultaneously. Originality/value This study proposes and tests an explanation for the impact of managerial ability on corporate tax risk and long-run avoidance simultaneously in the context of an emerging country.

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Nexus between audit committee and corporate risk: evidence from Pakistan

Cited by 4 publications

References 78 publications

Impact of Audit Quality on Stock Price Crash Risk: Evidence from Pakistan Stock Exchange

Impact of Audit Quality on Stock Price Crash Risk: Evidence from Pakistan Stock Exchange

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

The impact of managerial ability on corporate tax risk and long-run tax avoidance: empirical evidence from a developing country

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