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

Fingerprint

Corporate governance
Monitoring
Audit committee
Financial reporting quality
Compromise
Audit

Keywords

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

ASJC Scopus subject areas

  • Business, Management and Accounting(all)

Cite this

Ineffective corporate governance : Busyness of internal board monitoring committees. / Al-Yahyaee, Khamis H.; Al-Hadi, Ahmed.

In: Corporate Ownership and Control, Vol. 13, No. 3continued2, 01.03.2016, p. 309-325.

Research output: Contribution to journalArticle

@article{f1f5b25c99e9477a8a1cdf814140b082,
title = "Ineffective corporate governance: Busyness of internal board monitoring committees",
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.",
keywords = "Board, Effectiveness, Internal busyness, Monitoring, Risk committee",
author = "Al-Yahyaee, {Khamis H.} and Ahmed Al-Hadi",
year = "2016",
month = "3",
day = "1",
language = "English",
volume = "13",
pages = "309--325",
journal = "Corporate Ownership and Control",
issn = "1727-9232",
publisher = "Virtus Interpress",
number = "3continued2",

}

TY - JOUR

T1 - Ineffective corporate governance

T2 - Busyness of internal board monitoring committees

AU - Al-Yahyaee, Khamis H.

AU - Al-Hadi, Ahmed

PY - 2016/3/1

Y1 - 2016/3/1

N2 - 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.

AB - 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.

KW - Board

KW - Effectiveness

KW - Internal busyness

KW - Monitoring

KW - Risk committee

UR - http://www.scopus.com/inward/record.url?scp=85018202850&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=85018202850&partnerID=8YFLogxK

M3 - Article

AN - SCOPUS:85018202850

VL - 13

SP - 309

EP - 325

JO - Corporate Ownership and Control

JF - Corporate Ownership and Control

SN - 1727-9232

IS - 3continued2

ER -