Variables/specifications

Expected signs

Measurements

Authors

Return on Equity (ROE)

Net income divided by shareholders equity

Ramlee and Ahmad (2015); Pagach and Warr (2010)

Enterprise Risk Management (ERM)

+

Strategy + Operation + Reporting + Compliance

STRATEGY = (Sales_i − µSales)_i/σ Sales.

where Sales_i = Sales of firm i in year 1; µSales = Average industry sales in year 1 and σ Sales = standard deviation of sales of all firms in the same industry

OPERATION = Sales/Total assets.

REPORTING = Material weakness + Qualified Auditor Opinion + Restatement.

Material Weakness: if the firm disclosed any material weakness in its annual report 1, otherwise 0.

Qualified Opinion: Firms with unqualified auditor’s opinion is set 0, otherwise 1.

Restatement: if the financial statement is restated 1, otherwise 0.

COMPLIANCE = Auditor fees/Total assets.

Zuo, Isa and Rahman, (2017); Gordon, Loeb and Tseng (2009)

Risk Committee Size (Cosize)

+

Total number of directors in risk management committee

Rashid, Ibrahim and Othman (2012)

Risk Committee Diligence (Codilig)

+

Number of meetings held and attended by the

committee and committee members in a year

Allegrini and Greco (2013); Saleh, Iskandar and Rahmat (2007)

Risk Committee Composition (Cocomp)

+

The propoprtion of non-executive directors to total of directors in the risk management committee

Husaini and Saiful (2017); Dionne and Triki (2005)

Risk Committee Gender Diversification (Cogend)

+

Dichotomous variable, where 1 indicates the existence of female members in risk management committee, otherwise 0

Abdullah and Ismail (2015)

Risk Committee Expertise (Coexpe)

+

The proportion of directors with financial expert to the total directors in the committee.

Dionne and Triki (2005)

Firm size

+

Log of total assets

Rao (2018)

Leverage

-

Total Debt divide by total equity

Andersson and Wallgren (2018)