The Role of Board of Directors in Risk Management - Empirical Study

نوع المستند : المقالة الأصلية

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المستخلص

 Abstract
The current study examines the role of board of directors in improving risk
management. It examines the impact of board of directors' characteristics on risk
management effectiveness through board size, board independence, the number of board
meetings, and CEO duality. In order to achieve this goal, the study introduced an index to
measure the risk management. The proposed index is consisted of thirteen items, which are
measured by the count of risk management related sentences through a manual content
analysis of annual reports of a sample of listed Egyptian companies. The financial reports
issued from 2014 to 2017 were analyzed. The research sample includes 50 non-financial
firms listed in Egyptian stock exchange with a total number of observations equal to 200
from 13 sectors. for testing the following hypotheses:
• The first hypothesis: "There is no significant relationship between board size and
 the risk management in the Egyptian listed companies". 
 • The second hypothesis: "There is no significant relationship between board
independence and the risk management in the Egyptian listed companies".
• The third hypothesis: "There is no significant relationship between the number of
board meetings and the risk management in the Egyptian listed companies".
• The fourth hypothesis: "There is no significant relationship between CEO duality
and the risk management in the Egyptian listed companies".
The overall results revealed that the board of directors' characteristics affects risk
management. The results reveal that board independence, board meetings, and CEO duality
are positively and significantly correlated with risk management index. On the other hand,
board size shows statistically insignificant correlation with risk management index. The
study recommended that members of the board should have qualifications and experience so
that they can perform the functions efficiently in risk management. 
 

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