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    Ineffective corporate governance: Busyness of internal board monitoring committees

    253860.pdf (864.3Kb)
    Access Status
    Open access
    Authors
    Al-Yahyaee, K.
    Al-Hadi, Ahmed
    Date
    2016
    Type
    Journal Article
    
    Metadata
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    Citation
    Al-Yahyaee, K. and Al-Hadi, A. 2016. Ineffective corporate governance: Busyness of internal board monitoring committees. Corporate Ownership & Control. 13 (3-2): pp. 309-325.
    Source Title
    Corporate control and ownership
    DOI
    10.22495/cocv13i3c2p5
    ISSN
    1727-9232
    School
    School of Accounting
    URI
    http://hdl.handle.net/20.500.11937/54525
    Collection
    • Curtin Research Publications
    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.

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