The Effect of the Quality of the Enterprise Risk Management System and the Characteristics of the Audit Committee on the Reputation of Companies

Subject Areas :

Yaghoob Daneshi ¹ , ali Esmaeelzadeh ²

1 - Department of Accounting, Central Tehran Branch, Islamic Azad University, Tehran, Iran
2 - Department of Accounting, Central Tehran Branch, Islamic Azad University, Tehran, Iran, Corresponding

Received: 2022-04-12 Accepted : 2022-06-16 Published : 2022-07-23

Keywords: Company reputation, Keywords: Quality of Enterprise Risk Management System, Characteristics of the Audit Committee,

Abstract :

AbstractOver the last several decades, corporate reputation has gained increasing importance for both managers and academics. Research on corporate reputation has generally argued that reputational risk, or risk of reputation loss, stems from all company risks. When a risk drives a firm into a crisis, some stakeholders' interests may go unsatisfied, and the firm's corporate reputation may be eroded. The more effective the enterprise risk management system is, the fewer crises a company will face and the less risk there will be to lose its corporate reputation.The purpose of this study is to investigate the effect of the quality of enterprise risk management system and the characteristics of the audit committee on the reputation of companies listed on the Tehran Stock Exchange. The statistical population of the study is the companies listed on the Tehran Stock Exchange, of which 100 companies were selected as a sample. The results of Tobit regression model test showed that the quality of enterprise risk management system and the characteristics of the audit committee have a significant effect on the reputation of the companies under study.

References:

فهرست منابع
رضایی، فرزین، اکرم فیرزوعلیزاده و الهام نورمحمدی، (1399)، "رابطه توانایی مدیریت با اجزاء مدیریت ریسک یکپارچه"، پژوهشهای حسابداری مالی و حسابرسی، سال دوازدهم، شماره 48، صص 23-41.
پوراحمدی، محمدحسین و غلامرضا فرساد امان اللهی، (1400)، "تاثیر مدیریت ریسک سازمانی بر رابطه بین تامین مالی خارجی و مدیریت سود"، پژوهشهای حسابداری مالی و حسابرسی، سال سیزدهم، شماره 49، صص 73-95.
قادری، صلاحالدین و یداله تاریوردی، (1399)، "مدل مدیریت ریسک شرکتی و پیامدهای آن در کنترا موثر ویژگیهای سود شرکت"، فصلنامه پژوهشهای حسابداری مالی و حسابرسی، سال دوازدهم، شماره 46، صص 77-106.
نجم روشن، سعید، زهرا نصرالهی و سیدمحمد طباطبایی نسب، (1390)، "شناسایی و رتبه بندی عوامل موثر بر حسن شهرت شرکت های لوازم خانگی"، کاوش های مدیریت بازرگانی، دوره  3، شماره  6، صص 75-104.  

Albring, S., Robinson, D., & Robinson, M. (2014), “Audit Committee Financial Expertise, Corporate Governance, and the Voluntary Switch from Auditor-provided to Non-auditor-provided Tax Services”, Advances in Accounting, 30(1), PP.81-94. https://doi.org/10.1016/j.adiac.2013.12.007
Arun, Th. G., Almahrog, Y. E., & Aribi, Z. A. (2015), “Female Directors and Earnings Management: Evidence from UK Companies”, International Review of Financial Analysis, 39, PP. 137-146.
Badolato, P. G., Donelson, D. C., & Ege, M. (2014), “Audit Committee Financial Expertise and Earnings Management: The Role of Status”, J. Account. Econ. 58, PP. 208–230.
Beatty, A. K., & Ramesh, J. We. (2019), “The Importance of Accounting Changes in Debt Contracts: the Cost of Flexibility in Covenant Calculations”, Journal of Accounting and Economics. 33(2), PP. 205-227
Bédard, J., & Gendron, Y, (2010), “Strengthening the Financial Reporting System: Can Audit Committees Deliver?”, Int. J. Audit. 14, PP. 174–210.
Bédard, J., Chtourou, S.M., & Courteau, L. (2004), “The Effect of Audit Committee Expertise, Independence, and Activity on Aggressive Earnings Management”, Auditing: A Journal of Practice & Theory 23 (2), PP. 13-35.
Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees. (1999), “Report and Recommendations of the Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees”, New York: New York Stock Exchange and the National Association of Securities Dealers
Brammer, S. J., & Pavelin, S. (2006), “Corporate Reputation and Social Performance: The Importance of Fit”, Journal of Management Studies, 43(3), PP. 435-455.
Brammer, S., Millington, A., & Pavelin, S. (2009), “Corporate Reputation and Women on the Board”, British Journal of Management. 20(1), PP. 17-29. 
Carcello, Joseph V., Hollingsworth, Carl W., Klein, A., & Neal, T. L., (2006), “Audit Committee Financial Expertise”, Competing Corporate Governance Mechanisms, and Earnings Management (February 2006). Available at SSRN: https://ssrn.com/abstract=887512 or http://dx.doi.org/10.2139/ssrn.887512.
Castello, A & Wittenberg-Moerman, R. (2011), “The Impact of Financial Reporting Quality on Debt Contracting: Evidence from Internal Control Weakness Report”, Journal of Accounting Research, 49, PP. 97-136.
Colquitt, L. L., Hoyt, R. E., & Lee, R. B. (1999), “Integrated Risk Management and the Role of the Risk Manager”, Risk Management and Insurance Review, 2(3), PP. 43-61.
Dan S. Dhaliwal, Vic Naiker, Farshid Navissi. (2013), “The Association between Accruals Quality and the Characteristics of Accounting Experts and Mix of Expertise on Audit Committees”, Contemporary Accounting Research 27(3), DOI:10.2139/ssrn.1548766.
Davidson, W. N., Xie, B., & Xu, W. (2004), “Market Reaction to Voluntary Announcements of Audit Committee Appointments: The Effect of Financial Expertise”, J. Account. Public Policy, 23(4), PP. 279–293
Fombrun, C. J., & Shanley, M. (1990), “What's in a Name? Reputation Building and Corporate Strategy”, Academy of Management Journal, 33(2), PP. 233-258. 
Galbreath, J. and Shum, P. (2012), “Do Customer Satisfaction and Reputationmediate the CSR–FP Link? “, Evidence from Australia. Australian Journal of Management, 37(2), PP. 211–229.
General Accounting Office (GAO) (1991), “Audit Committees: Legislation Needed to Strengthen Bank Oversight”, Washington, DC: GAO
Golshan, N. M., & Rasid, S. A. (2012), “Determinants of Enterprise Risk Management Adoption: An Empirical Analysis of Malaysian Public Listed Firms”, International Journal of Social and Human, Sciences 6, PP. 119-126.
Hall, E. H., & Lee, J. (2014), “Assessing the Impact of Firm Reputation on Performance: an International Point of View”, International Business Research, 7(12), PP.1.
Hoyt, R. E., & Liebenberg, A. P. (2008), “The Value of Enterprise Risk Management: Evidence from the U. S. Insurance Industry, Society of Actuaries”, ERM Monograph Paper, available at http: //www.soa.org, accessed 07/01/2013.
Hoyt, R. E., & Liebenberg, A. P. (2011), “The Value of Enterprise Risk Management”, Journal of Risk and Insurance, 78 (4), PP. 795-822.
Huang, X., Kang, F., (2018), “Company Reputation and Auditor Choice: Evidence from Fortune 1000 Companies”, Accounting Research Journal, 31(2), PP. 232-248.
Jalilvand et al, (2019), “Implementation of Organizational Risk Management; Identification, Analysis, and Evaluation”, Journal of Asse Management and Financing, 7(2), PP. 1-24
John F. Mahon. (2002), “Corporate Reputation: Research Agenda Using Strategy and Stakeholder Literature”, Business & Society, 41(4), PP. 415-445
Klein, A., (2002), “Audit Committee, Board of Director Characteristics, and Earnings Management”, Journal of Accounting and Economics, 33(3), PP. 375–400.
Liebenberg, A. P. & Hoyt, R. E. (2003), “The Determinants of Enterprise Risk Management Evidence from the Appointment of Chief Risk Officers”, Risk Management and Insurance Review, 6 (1), PP. 37-52
Pagach, D., & Warr, R. (2011), “The Characteristics of Firms that Hire Chief Risk Officers“, Journal of Risk and Insurance, 78 (1), PP. 185-211.
Perez-Cornejo, C., Quevedo-Puente, E. D., & Delgado-García, J. B. (2019), “How to Manage Corporate Reputation? The Effect of Enterprise Risk Management Systems and Audit Committees on Corporate Reputation”, European Management Journal, 37(4), PP. 505-515.
Qi, B., & Tian, G. (2012), “The Impact of Audit Committees' Personal Characteristics on Earnings Management: Evidence from China“, Journal of Applied Business Research, 28(6), PP. 1331–1343.
Sarbanes-Oxley (SOX) Act (2002), “Public Law No. 107–204,116 stat.745, sec 1–1107
Smith Committee (2003), “Audit Committees, Combined Code Guidance”, A Report and Proposed Guidance by the FRC - Appointed Group. London: FRC.