Ineffective corporate governance: Busyness of internal board monitoring committees

Khamis H. Al-Yahyaee, Ahmed Al-Hadi

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

We examine whether the voluntary formation of a Risk Committee (RC) compromises the effectiveness of other monitoring duties carried out by the board members. We argue that adding more monitoring committees increases the board’s internal busyness, which reduces the effectiveness of monitoring by the Audit Committee (AC). Using a sample of financial firms over the period 2007 to 2011 from the Gulf Cooperation Countries (GCC), we find that voluntarily adopting a risk committee impairs the effectiveness of the audit committee, which in turn reduces financial reporting quality. Our findings suggest that multiple layers of monitoring capacity viz-a-viz the existence of both an audit and risk committee may weaken the quality of monitoring provided by the audit committee.

Original languageEnglish
Pages (from-to)309-325
Number of pages17
JournalCorporate Ownership and Control
Volume13
Issue number3continued2
Publication statusPublished - Mar 1 2016

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Keywords

  • Board
  • Effectiveness
  • Internal busyness
  • Monitoring
  • Risk committee

ASJC Scopus subject areas

  • Business, Management and Accounting(all)

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