Risk Management Committee Size, Independence, Expertise and Financial Performance of Listed Insurance Firms in Nigeria

International Journal of Research and Innovation in Social Science (IJRISS) | Volume IV, Issue V, May 2020 | ISSN 2454–6186

Risk Management Committee Size, Independence, Expertise and Financial Performance of Listed Insurance Firms in Nigeria

Ibrahim Mallam Fali^1*, Okika Nkiru Philomena², Yunusa Ibrahim³ & Janada Amos^4
1&4Department of Accounting, University of Calabar, Nigeria
²Independent Researcher, Lagos, Nigeria
³Department of Accountancy, Kaduna Polytechnic, Kaduna, Nigeria
*Corresponding author

Abstract:- Continuous collapse of many organization have increase the demand to have a committee aside the board whose focus is on setting and implementing firm risk policy, appetite and limit. With firm goal on maximizing profit, this study evaluates the effect of risk management committee size, independence, expertise on financial performance of listed insurance companies in Nigeria from 2012 to 2018. The study used a sample size of (24) insurance companies from population of 27 insurance firms. The study used secondary data obtained from annual report of the firms. The dependent variable was measured by return on asset (ROA) The study employed Random Effect regression model and find evidence that risk management committee expertise has negative and significant effect on financial performance while risk management committee size and independence does not influence financial performance. The study concludes that risk management committee constrain on management excess risk undertaking will lead to poor financial performance of insurance firms. The study recommends that the risk management committee should be made effective by inclusion of more members with back ground on finance and actuarial sciences into risk management committee structures.

Keywords: Financial Performance, Risk management size, Risk management Independence, Risk management Expertise

I. INTRODUCTION

In developed and developing countries corporate governance has become a common subject for discussion. The widely held view of corporate governance as determining firm performance and protecting shareholders ‘ interests has led to increased global attention (Heenetigala & Armstrong, 2011).The corporate governance system specifies the allocation of rights and duties to different organizational members, such as the board, executives, shareholders and other stakeholders, and describes the rules and procedures for making corporate relations decisions. By doing so, it also establishes the mechanism by which the company’s targets are set and the means to meet those targets and track the results (Akinsulire, 2006). Corporate governance sub divided into several committee amongst are risk management, audit, board, remuneration etc. For the purpose of these studies we are looking at the aspect of risk management committee.

Read More