Risk Management Committee Diversity and Firm Performance: Insights from Malaysia’s Top 100 Listed Companies

Abstract

This study examines how the characteristics of the Risk Management Committee (RMC), specifically ethnic composition, size, and knowledge, affect the financial performance of listed firms in Malaysia. Grounded in agency theory and resource dependence theory, it argues that a well-structured and diverse RMC enhances oversight, decision-making, and firm performance. Using data from the top 100 non-financial firms listed on Bursa Malaysia in 2021, the study applies descriptive statistics, Pearson correlation, regression analysis, and normality tests to evaluate the relationship between RMC attributes and financial performance measured by Return on Assets (ROA). The findings indicate that RMC size and knowledge significantly improve financial performance, while ethnic diversity shows a slight negative association, possibly due to communication and coordination challenges. Overall, the results highlight the importance of knowledgeable and well-composed RMCs in promoting sound governance and corporate sustainability. This study contributes to the discourse on board and committee diversity, offering practical insights for regulators and firms. The findings also support Malaysia’s pursuit of Sustainable Development Goals 8 (Decent Work and Economic Growth) and 16 (Peace, Justice, and Strong Institutions), emphasizing the value of inclusive and capable governance structures in achieving sustainable growth.