The Influence of Board of Directors on Risk Management and Financial Performance: A Study within Chinese Corporate Governance

Abstract: This paper examines the relationship between board characteristics, risk management processes, and financial performance of corporations. The study aims to determine the impact of board composition (size, independence, and expertise) on firm performance and to test the moderating role of risk management practices (risk management committee and risk disclosure) in this association. A mixed-method approach was employed, incorporating descriptive statistics, correlation analysis, regression models, mediation analysis, and robustness checks using firm-level data. Results indicate that certain board features substantially and positively influence financial performance metrics such as ROA and ROE. Additionally, risk management practices positively contribute to better financial outcomes. Mediation analysis reveals that risk disclosure partially mediates the relationship between board characteristics and financial performance, acting as a mechanism through which governance influences better financial results. Robustness tests confirm the reliability of these relationships across various model specifications. This research contributes significantly to the understanding of corporate governance and its value to organizations, offering practical implications for those involved in governance, policy, and research aimed at enhancing firm performance through effective governance and risk management. Keywords: Board Characteristics, Risk Management, Financial Performance, Governance, Risk Disclosure, Regression Analysis. Title: The Influence of Board of Directors on Risk Management and Financial Performance: A Study within Chinese Corporate Governance Author: Stancey Tumiso Nkgowe, Concepcion Bengono Ncogo Okori International Journal of Management and Commerce Innovations ISSN 2348-7585 (Online) Vol. 12, Issue 1, April 2024 - September 2024 Page No: 165-184 Research Publish Journals Website: www.researchpublish.com Published Date: 12-August-2024 DOI: https://doi.org/10.5281/zenodo.13304559 Paper Download Link (Source) https://www.researchpublish.com/papers/the-influence-of-board-of-directors-on-risk-management-and-financial-performance-a-study-within-chinese-corporate-governance