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Research in International Business and Finance 60 (2022) 101575
Contents lists available at ScienceDirect
Research in International Business and Finance

journal homepage: www.elsevier.com/locate/ribaf
Full length Article
Determinants of bank risk governance structure: A

cross-country analysis
Quang Khai Nguyen
School of Banking, University of Economics Ho Chi Minh City, Viet Nam
A R T I C L E I N F O A B S T R A C T
JEL Classifications: This study investigates the determinant of the bank risk governance structure. Using bank-level
G28 panel data of 104 commercial banks in 10 ASEAN countries between 2002–2019, we find that
G32 the risk governance structure (including audit committee size, audit committee independence,
G33
financial and accounting experts on the audit committee, audit committee meeting frequency,
G34
K22
risk committee existence, and external audit quality) relates positively to a bank’s scope of
operation and monitoring benefit, but negatively to the monitoring cost and CEO negotiation
Keywords:
power. However, these relations are different between banks with high and low levels of risk and
Scope of operation
Private benefit banks in countries with different institutional qualities. Our findings provide important policy
Monitoring cost implications for designing a risk governance structure in the banking sector.
CEO negotiation power
Risk governance structure
1. Introduction
In general corporate firms, the separation of ownership and control creates a conflict of interest between managers (agent) and
shareholders (principal), which is known as the agency problem. The agency problem implies that managers can conduct the business
management and make decisions for their personal benefit, instead of the shareholders’. There is general agreement among financial
researchers that "corporate governance" is a solution for dealing with the incomplete contract and agency problem in modern corporate
governance models. Many previous studies have tried to find appropriate corporate governance structures for firms, but the results are
not consistent.
Most of the previous studies related to corporate governance structure focused on non-financial firms due to their worldwide
popularity, although financial firms also play an important role in the economy. Although banks operate under the general rules of
firms, the problem with poor corporate governance is more serious in the banking sector than in other non-financial firms. Bank
failures especially have more significant costs because a bank is a special economic unit and has a "special" role in financial inter
mediation, in the payment system, maturity, liquidity, information, and denomination transformation. Additionally, banks can help
other firms (shareholders, creditors) facilitate better governance (Caprio and Levine, 2002; Barth et al., 2004). Therefore, better
corporate governance of banks can contribute to the proper functioning of the other firms and thereby promote effective resource
allocation in the economy.
In addition, after the 2008 financial crisis caused by the collapse of the banking system, the corporate governance of banks has
received more and intense attention and regulators around the world also pay more attention to banking system activities (Ashraf
E-mail address: nqkhai.sdh@gmail.com.
https://doi.org/10.1016/j.ribaf.2021.101575
Received 9 June 2021; Received in revised form 8 November 2021; Accepted 13 November 2021
Available online 19 November 2021
0275-5319/© 2021 Elsevier B.V. All rights reserved.
Q.K. Nguyen Research in International Business and Finance 60 (2022) 101575
et al., 2020; Premti et al., 2021). Besides, researchers in increasing numbers are trying to find an appropriate risk governance structure,
which is defined as corporate governance structure related to risk management (Aebi et al., 2012; Aljughaiman and Salama, 2019), for
banks to reduce the problem of agency and incomplete contracts, as well as enhance the performance and maintain the stability of
banks (Ballester et al., 2020; Louhichi et al., 2020). Pathan (2009) found that board size and board independence significantly affect
bank risk-taking in US financial firms, implying that the board is an important element that affects bank risk. Besides the Board of
Directors, the Board’s committees were also found to have a key role in oversight risk management. For example, Sun and Liu (2014)
found that an appropriate audit committee can constrain risk-taking activity and enhance the effectiveness of bank risk management.
Besides the audit committee, there is evidence in the literature that external audits have a role in controlling bank risk (Cohen et al.,
2017; Ahmad and Alrabba, 2017). Kim et al. (2003) noted that the Big 4 exercise more effective control when managers have in
centives to manipulate earnings upward. After the financial crisis of 2008, increasingly, banks worldwide established risk committees
to oversee risk management framework implementation and provide recommendations about optimal risk strategies. Aljughaiman and
Salama (2019) report the positive relationship between the risk governance structure (including risk committee and CRO charac
teristics) and risk management effectiveness in MENA countries. Overall, the findings of earlier studies confirm the important role of
risk governance in the banking sector.
Although the role of risk governance in bank risk management has become increasingly important after the 2008 financial crisis,
there are very few empirical studies focusing on what an appropriate risk governance structure is, for banks. However, some studies
focused on non-financial firms and investigated the determinant of board structure. Boone et al. (2007) find that board size and board
independence depend on the complexity of the firms, a trade-off between the benefits and costs of monitoring, and the manager’s
influence. Similarly, using a sample of 7,000 firms from 1990 to 2004, Linck et al. (2008a) found that board structure across firms is
consistent with the costs and benefits of monitoring functions, and that board structures are different in small and large firms. Most of
the prior studies focus on the board structure because the board of directors is known as the “apex body” of internal corporate
governance (Fama and Jensen, 1983b). However, in risk management, other governance mechanisms are also important. Sun and Liu
(2014) argued that the board plays an oversight risk management role not directly but through its committee, i.e., audit or risk
committee. To the best of our knowledge, although risk governance is of increasing importance in the banking sector, studies
investigating the determinant of risk governance structure are scarce. In addition, after the financial crisis of 2008, regulators in many
countries attempted to have a code or guideline for the banks to restructure their risk governance. However, whether there should be a
uniform structure for all banks is still debated.
In the ASEAN region, the banking system in most of the countries is developing very fast (Nguyen, 2020, 2021a). After the 2008
financial crisis, the risk governance of banks in ASEAN countries changed a lot, but not consistently. Most of the banks in Vietnam,
Malaysia, and Singapore established stand-alone risk committees to play an oversight role in risk-taking and risk management.
However, most of the banks in other countries reserve this role for the audit committee, with risk governance structure differing from
bank to bank. Therefore, using the data of banks in ASEAN countries is appropriate to investigate the determinant of risk governance
structure. Moreover, research on risk governance using a sample of ASEAN banks is still limited. Using the data of ASEAN countries to
investigate the determinant of risk governance structure can provide important indicators for banks in restructuring risk governance in
not only ASEAN countries, but others too.
In this background, the main objective of our study is to investigate the determinant of bank risk governance structure and spe
cifically, whether it is influenced by the bank’s scope of operations, trade-offs between monitoring costs and benefits, and CEO
negotiation power, after controlling for other bank-specific factors. By focusing on the bank risk governance structure (including the
audit committee, risk committee, and external audit), this study contributes to the literature in several ways.
First, to our knowledge, this is a pioneering study in investigating the determinant of the risk governance structure in the banking
sector. Unlike previous studies that have tended to focus only on the board structure, this study extends the current literature by
investigating six characteristics of the risk governance structure. Our study reveals that bank risk governance has a positive relation to
“scope of operation” and the trade-offs between monitoring costs and benefits but negatively relates to the CEO negotiation power.
Secondly, by focusing on the role of risk governance in risk management, we investigate the difference in the determinants of risk
governance structure at different levels of risk. Our results show that the scope of operation and the CEO negotiation power are better
determinants of risk governance in banks with a higher level of risk, while trade-offs between costs and benefits of monitoring are
better in low-risk banks. Finally, by using cross-country data, we find that determinants of the risk governance structure also depend on
the institutional quality of each country, a factor not considered in the literature. Specifically, we find that the CEO negotiation power
is a better explanation for banks’ risk governance in countries with low institutional quality. Our findings will provide some important
implications for regulators as well as bank shareholders, in restructuring risk governance.
The rest of the paper is organized as follows. In Section 2, we discuss the background of the guidelines and principles related to the
risk governance structure and the context of the application of banks. In Section 3, we present the theoretical framework for the risk
governance structure. Section 4 covers the empirical literature and hypotheses development. Section 5 deals with the data and research
design, Section 6 with the empirical findings, and Section 7 with the summary and conclusion.
2. Background
The financial crisis of 1997–1998 experienced by Asian countries, followed by that of 2008, has highlighted the weaknesses of bank
risk governance as a major cause of the failure (Aebi et al., 2012; Hopt, 2013). Weaknesses in bank risk governance particularly
comprise the lack of understanding of the risk-taking activities in risk management and boards not paying much attention to their risk
management function (FSB, 2013; OECD, 2015). After the 2008 financial crisis, several international multilateral bodies such as the
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“Basel Committee on Banking Supervision” (BCBS), the “Financial Stability Board” (FSB), the “Organisation for Economic
Co-operation and Development” (OECD), and the International Monetary Fund (IMF) published a corpus of guidelines and principles
to improve the practices in bank risk governance in particular and in bank corporate governance in general (FSB, 2013; BCBS, 2015;
OECD, 2015; IMF, 2009). Although these guidelines and principles have the common goal of enhancing the effectiveness of bank risk
governance, they are not consistent. For example, BCBS (2015) suggests that the audit committee should “have a chair who is in
dependent and is not the chair of the board or of any other committee” and “include members who have experience in audit practices,
financial reporting and accounting”, while FSB (2013) suggests that members are independent and “includes members who have
experience with regard to audit practices and financial literacy at a financial institution”. While FSB (2013) also strongly suggests that
banks have a stand-alone risk committee distinct from the audit committee, BCBS (2015) still insists on the audit committee to play the
risk oversight role. These inconsistent guidelines may make it difficult for banks worldwide to establish appropriate risk governance
structures.
After the 2008 financial crisis, most banks in ASEAN countries have started implementing risk governance practices, but in different
ways. Some countries established or revised guidelines related to governance based on the guidelines of international multilateral
bodies. Singapore and Malaysia, for example, issued "Risk Governance" guidelines in 2013, Bank Indonesia (Indonesian regulator)
issued Circular Letter No.13/24/DPNP in 2012 which explicitly explains risk governance, and Bank of Thailand (Thailand regulator)
published The Handbook for Directors of Financial Institutions in Chapter 4, explaining the role of boards in promoting risk gover
nance. While Banko Sentral ng Pilipinas (Philippine regulator) adopted the guidance relating to risk governance in August 2017 with
the publication of Circular 971, Vietnam’s corporate governance code of best practices draws upon the G20/OECD principles of
corporate governance for both financial and non-financial firms. The codes or guidelines related to risk governance are very different in
these countries. For example, the existence of a risk committee is mandatory in Malaysia, Thailand, Indonesia, Vietnam, Singapore,
and the Philippines, but not in some other countries. Relating to the audit committee structure, the Indonesian regulator requires that
the audit committee consists of at least two independent members, while Thailand and Malaysian regulators require at least three
(Nam and Lum, 2006). All these differences make the risk governance structure of banks in ASEAN countries different.
Meanwhile, some researchers still consider the international guidelines to be general and incapable of guiding banks in ensuring
effective corporate governance (Helleiner, 2010). Walker (2011) argued that continuous improvement in risk management and
strengthened governance can prevent future financial crises. Therefore, many countries, including those of ASEAN, tried to establish or
revise the guidelines and regulations to enhance bank risk management, restructure risk governance structures and maintain bank
stability, as informed by these international standards. Actually, risk governance of banks is based on these guidelines not only in
ASEAN countries but also in others. However, the risk governance structure differs much from bank to bank because banks apply these
guidelines in different ways. Since all countries in the world and particularly ASEAN countries are trying to revise regulations and
guidelines to enable banks to operate more efficiently and stably, it is important to study the determinant of the risk governance
structure of banks.
3. Theoretical literature review
Some literature agrees that corporate governance should be in line with the “scope of operation”, which is known as the scope of
operation theory, which is defined as the diversity, nature, and complexity of the business production process (Boone et al., 2007;
Linck et al., 2008a). Further, the more diversified and larger firms generally expand into more geographical areas, have more product
lines, and undertake more mergers and acquisitions than smaller firms. As these firms require specialized skills and knowledge, larger
corporate governance may be required to support these differentiated and complex activities (Bhagat and Black, 1999; Aggarwal and
Samwick, 2003; Zhou et al., 2018) and oversee management performance (Patro et al., 2003; Coles et al., 2008). Moreover, large, and
complex firms generally require larger corporate governance because of the high information requirements. In this regard, some prior
studies have found that the board size is positively associated with the “scope of operations” of non-financial firms (Patro et al., 2003;
Boone et al., 2007; Coles et al., 2008). In risk management, respective, larger, and more complex banks have more risk attached
because of the difficulty of board of directors during situations of oversight risk. They, therefore, need larger risk governance, for
example, the establishment of a larger audit committee or risk committee.
Besides the size of risk governance, the “scope of operations” may be related to risk governance composition. For example, some
literature has found that the “scope of operations” can affect board independence (Patro et al., 2003; Boone et al., 2007; Coles et al.,
2008; Linck et al., 2008a) and the business expertise represented on the board itself (Markarian and Parbonetti, 2007). Large and
complex firms may need more external independent directors to reduce agency problems because they have been proven to monitor
more effectively than inside directors (Lehn et al., 2005). Moreover, independent directors generally bring valuable expertise and
potential networks and become important for large and complex firms (Linck et al., 2008a). Boone et al. (2007); Linck et al. (2008a),
and Coles et al. (2008) support these arguments by finding evidence that the independence of corporate governance positively cor
relates with “scope of operations”.
Regarding the monitoring theory, the noisiness of a firm’s operating environment will affect monitoring costs (Demsetz and Lehn,
1985). Gillan et al. (2011) used this notion to argue that the board of directors will monitor less in noisy environments. On the other
hand, Patro et al. (2003) found that high-growth firms will have small boards with a high proportion of insiders because their
monitoring costs are high. The term “monitoring” is used to explain that the corporate governance structure is also affected by the
trade-off benefits of monitoring managers’ “private benefits” and the “monitoring costs” in some literature (Raheja, 2005; Harris and
Raviv, 2008). The term “private benefits”, indicates the incentives offered to monitoring managers that increase when they have more
opportunities to extract “private benefits” from their firms (Boone et al., 2007; Shen et al., 2021). Such opportunities generally may
3
increase if the firms increase their free cash flow (Jensen, 1986). If such an opportunity is high, internal corporate governance will need
more outside independent directors and make itself or its committee larger in overall size, more independent, and more effective.
“Monitoring costs” are higher when firms have higher levels of information asymmetry (Fama and Jensen, 1983a; Jensen, 1993;
Gillan et al., 2011). Some authors have argued that board monitoring costs are higher in less stable or noisier environments 1 and that
firms with higher “monitoring costs” should rely less on independent directors (Starks et al., 2004; Fama and Jensen, 1983a; Patro
et al., 2003). This is because outside directors will be less informed about the firm’s activities, and transferring firm-specific infor
mation to outside directors becomes costly (Linck et al., 2008a). Moreover, larger boards and their committees may have no motivation
to get such information due to free-riding problems (Linck et al., 2008b). On the contrary, inside directors can always access such
information because it is part of their daily activities. This has been confirmed by prior studies on board structure (Raheja, 2005;
Adams and Ferreira, 2012; Harris and Raviv, 2008), showing that monitoring costs decrease the independence of internal corporate
governance. Therefore, firms with a high level of information asymmetry can benefit from smaller governance and a lower repre
sentation of independent directors because of the high “monitoring costs”. Based on the aforesaid discussion, optimal internal
governance will require more outside directors and will have a larger overall size, especially if firms have higher manager’s private
benefits and lower cost of monitoring. Some authors have found that the relationship between monitoring cost and manager’s private
benefits can affect the board structure. In other words, the board structure is connected to the trade-off between “monitoring benefit”
and “monitoring costs”. For example, Boone et al. (2007) found that “private benefits” (monitoring costs) associate positively
(negatively) with board size, but not with the independence of the board. Meanwhile, Linck et al. (2008a) supported the negative
relationship between “monitoring costs” and board size, as well as between “monitoring costs” and board independence. Linck et al.
(2008a) found a positive relationship between monitoring “private benefits” and board independence. By extension of the literature on
board structure, this study expects that private benefit and monitoring cost affect the risk governance structure.
Additionally, board independence was the result of negotiations between the CEOs and the Board (Hermalin and Weisbach, 1998),
which is known as the negotiation theory. When the CEO negotiation power is low, firms need a high level of board independence
(Hermalin and Weisbach, 1988; Baker and Gompers, 2003; Boone et al., 2007). The CEO negotiation power is generally derived from
their perceived ability (relative to a replacement) to affect board decisions, which can be proxied by CEO ownership, CEO tenure, or
firm performance. Hermalin and Weisbach (1998) argued that the negotiation power could be derived from CEO’s ability, which is
consistent with the efficiency argument that good decision-makers should have more decision-making power. If a CEO has good
performance and more experience, they may have greater power when negotiating with the Board. Conversely, when a firm performs
poorly, the board lowers its assessment of the CEO ability, reducing the CEO’s bargaining position. This poor performance is also an
indication that the management (including the CEO) requires more monitoring. Thus, there is an increased probability that the
shareholders will appoint more outside directors (Hermalin and Weisbach, 1988, 1998) to enhance the effectiveness of corporate
governance.
4. Empirical literature review and hypothesis development
4.1. Audit committee size determinants
Consistent with the evidence presented in the literature, the audit committee size should increase with the bank’s “scope of op
erations”. As for large and diversified banks, new members may be required with appropriate technical expertise to help monitor
management (Boone et al., 2007; Linck et al., 2008a) and possibly advise on technology, new product markets, M&A activities, and
regulations (Patro et al., 2003). Elamer et al. (2020a) found that the role of corporate governance may be affected by
macro-social-level factors which may determine the level of scope of operation. Based on these discussions, the hypothesis H1A for the
audit committee size is as follows:
H1A. Audit committee size is positively associated with the bank’s “scope of operations”.
Regarding the monitoring requirement of the board and its committee, audit committee size is expected to be larger when man
agement has opportunities to secure “private benefits”. This relation will be driven by the need for outside independent directors on the
committee. Nonetheless, an inverse relation is expected between the audit committee size and “monitoring cost” in the presence of
information asymmetry. Typically, this asymmetry is greater for banks with growth opportunities or noisy environments (Boone et al.,
2007; Linck et al., 2008a). In addition, banks with greater information asymmetry may benefit from smaller internal governance, as
they involve less “free-riding problems” and facilitate swift decision-making (Patro et al., 2003). Elamer et al. (2021) found that banks
with a larger board size can increase the informativeness of risk disclosures, indicating that corporate governance size is associated
with the monitoring function. Thus, the hypothesis related to the bank audit committee size can be stated as follows:
H1B. Audit committee size is associated positively with “monitoring benefits” and negatively with “monitoring costs”.
Further, the board and audit committee size may decrease with CEO negotiation power (Linck et al., 2008a), as in internal
corporate governance, when CEOs with low negotiation power make unfavorable decisions. In this case, shareholders and regulators
want to hire more outside directors for the board and its committee, making them significantly larger (Linck et al., 2008b; Pathan and
1
Noisy environment is an environment where information is of low quality (Chang et al., 2009).
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Skully, 2010). Following is the hypothesis H1C for audit committee size determinants:
H1C. Audit committee size is negatively associated with CEO negotiation power.
4.2. Independence of audit committee determinants
As per the scope of operation theory, it may be argued that larger and more complex banks may benefit from outside directors’
advice due to the additional agency problems that affect larger firms. In addition, the valuable expertise and potential network of
outside directors are considered important for large firms (Fama and Jensen, 1983b; Linck et al., 2008a). Thus, large firms optimally
may seek more outside directors for their boards and the board’s committees. Based on the above, the hypothesis H2A for bank audit
committee independence determinants can be stated as follows:
H2A. The percentage of independent directors on the audit committee is positively associated with the bank’s “scope of operations”.
Inside directors have more firm-specific knowledge (Fama and Jensen, 1983a) than independent outside directors and are hence
important for firms operating in more uncertain environments and needing greater specialized knowledge. As suggested by the
theoretical models of Adams and Ferreira (2007); Raheja (2005) and Harris and Raviv (2008), banks with high information asymmetry
should not depend solely on monitoring by outside directors. These theoretical studies predict a positive relation between monitoring
by outside directors and the level of “private benefits” available to insiders. In the presence of “private benefits” opportunities for
management, shareholders will need more outside directors on the board and its committee, to monitor them. Elamer et al. (2020b)
posited that board independence is positively associated with operational risk disclosures, indicating that the independence of
corporate governance correlates with the monitoring function. Thus, hypothesis H2B for bank audit committee independence de
terminants is formulated as follows:
H2B. The percentage of independent directors on audit committees is associated positively with “monitoring benefits” and nega
tively with “monitoring costs”.
In addition, consistent with negotiation theory and non-bank empirical findings, the independence of the board and its committees
may be expected to decrease with CEO negotiation power (Hermalin and Weisbach, 1988; Boone et al., 2007). Thus, the hypothesis
H2C for audit committee independence is developed as follows:
H2C. The percentage of independent directors on the audit committee is negatively associated with the CEO negotiation power.
4.3. Financial and accounting expert on audit committee determinants
The larger and more complex banks quite understandably need more professional governance. The roles of the audit committee
comprise the monitoring of the financial reporting process, constraining earning management (Xie et al., 2003), and oversight of risk
management (Nguyen, 2021b). Therefore, large and complex firms need more expertise on the board and its committee. In particular,
they require a director with financial or accounting expertise who will make the board’s decision-making more effective. Thus, the
hypothesis H3A for accounting and financial expertise on audit committee is developed as follows:
H3A. The percentage of accounting and financial experts on audit committees is positively associated with the bank’s “scope of
operations”.
When the degree of “private benefits” opportunities for management is high, shareholders will need more experts on the board and
its committee to monitor them. Zalata et al. (2018) found that financial experts on the audit committee can enhance monitoring
effectiveness and reduce the firm’s earning management, indicating that financial experts on the audit committee may be associated
with the monitoring function. Thus, based on this discussion, hypothesis H3B for accounting and finance expertise determinants is
formulated as follows:
H3B. The percentage of accounting and financial expert on audit committees is associated positively with “monitoring benefits” and
negatively with “monitoring costs”.
As discussed, in the literature review, when a firm performs poorly, the board lowers its assessment of the CEO’s ability, reducing
the latter’s bargaining position. The poor performance also indicates that the management requires more monitoring. The literature
agrees that a CEO with low performance increases earning management (Bergstresser and Philippon, 2006; Baker et al., 2019) and
risk-taking (Pathan, 2009; Lewellyn and Muller-Kahle, 2012). The addition of more audit and accounting members to the board and its
committee will make it easier to control such a CEO. Thus, there is an increased probability that the shareholders will appoint more
finance and accounting experts to the board’s committee. Based on this discussion, we propose hypothesis H3C as follows:
H3C. The percentage of accounting and financial experts on audit committees is negatively associated with the CEO negotiation
power.
4.4. Audit committee meeting frequency determinants
Board meetings offer an effective way of obtaining information necessary to exercise the director’s oversight responsibilities and
5
avoid personal liability (Adams and Ferreira, 2012). Similar to the board, the expectations regarding audit committee meetings are
based on the implications of the existing theoretical models and the limited empirical studies. Since banks with a greater scope of
operations require more outside directors on the board and its committees to monitor managers, they probably need to meet more
frequently to obtain, evaluate, exchange, and disseminate information among themselves to make decisions for the bank. Vafeas
(1999) suggests a positive relationship between the frequency of meetings and both the board size and the number of committees.
Thus, the formal hypothesis H4A for the frequency of audit committee meetings is as follows:
H4A. Audit committee meetings frequency is positively associated with the bank’s “scope of operations”.
In the presence of insider’s opportunities for private benefits, more frequent meetings may help to discipline insiders. Greco (2011)
found a positive relationship between insider ownership and audit committee meeting frequency. On the other hand, additional
meetings can also be predicted to decrease, if “monitoring costs” are higher for banks with high information asymmetry (Collier and
Gregory, 1999). Thus, the hypothesis H4B for the frequency of bank audit committee meetings can be stated as follows:
H4B. Audit committee meetings frequency is associated positively with “monitoring benefits” and negatively with “monitoring
costs”.
The meeting frequency also increases the effectiveness of internal governance (Greco, 2011; Raimo et al., 2021), because there
should be less demand for additional meetings when the CEO power is high. In contrast, if the CEO power is low, the board and its
committee need more meetings due to the more complicated monitoring work involved. Therefore, hypothesis H4C for bank audit
committee meeting frequency determinant is as follows:
H4C. Audit committee meeting frequency is negatively associated with CEO negotiation power.
4.5. Stand-alone risk committee determinants
Previous studies in developed markets suggest that a traditional audit committee is insufficient for overseeing financial and non-
financial risks in today’s complex and high-risk environments (Brown et al., 2009) and recommend firms should have stand-alone risk
committees. Abdullah and Said (2019) concluded that stand-alone risk committees can prevent finance crime, especially in large firms.
Recent studies such as Elamer et al. (2019) too posited that management, if supervised, can increase the level of risk disclosure. It
indicates that a stand-alone component existence may be associated with the bank’s “scope of operation”. Therefore, we propose
hypothesis H5A for risk committee existence as follows:
H5A. Bank risk committee existence is positively associated with the bank’s “scope of operations”.
Regarding monitoring theory, risk committees have important roles in monitoring managers taking risks and risk management
(Aljughaiman and Salama, 2019). They especially have a role in constraining compliance risk – the risk of the manager not being
compliant with codes, regulations, or shareholder requirements. If managers extract more “private benefits” when they have the
opportunity, banks will need to establish a risk committee. In addition, the risk committee’s existence needs more experts and in
dependent directors. This study, therefore, predicts that risk committee existence negatively relates to the monitoring costs for banks
with high information asymmetry. We propose hypothesis H5B for risk committee existence as follows:
H5B. Bank risk committee existence is associated positively with “monitoring benefits” and negatively with “monitoring cost”.
In addition, the risk committee is an additional internal governance mechanism to oversee risk and control a CEO’s risk-taking
activities. Therefore, when establishing stand-alone risk committees, the bank may also increase internal governance effectiveness
and constrain the CEO’s unfavorable decisions (Aljughaiman and Salama, 2019). As mentioned earlier in the discussion as well as in
the negotiation theory, this study proposes hypothesis H5B is as follows:
H5C. Bank risk committee existence is negatively associated with the CEO negotiation power.
4.6. External audit determinants
Firms need external audits to control the conflict of interest among firm managers, shareholders, and bondholders. If the firm is
large and complex, these conflicts of interest are high. Firms, therefore, need more quality forms of external audit firms. Firm char
acteristics such as leverage, size, etc., can affect the choice of an external auditor (Briozzo and Albanese, 2020; Chow, 1982). Hy
pothesis H6A for external audit quality is developed as follows:
H6A. External audit quality is positively associated with the bank’s “scope of operations”.
The literature agrees that an external audit committee might mitigate agency problems leading to reduced agency costs (Alghamdi
and Ali, 2012; Nguyen and Dang, 2020). External audit is typically appointed by an audit committee and a monitoring role is suggested
for both internal and external audit (Carey et al., 2000). When managers have more opportunities to extract “private benefits”, firms
may need more independence and quality of governance to constrain it. However, in such a noisy environment, firms may tend to
establish more simple governance. This study suggests that the quality of external auditors may decrease if monitoring costs are high.
Thus, we propose hypothesis H6B as follows:
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Table 1
Summary of Banks and Observations by Country.
Countries Total banks Banks selected Number of observations Percentage Period
Singapore 6 3 46 4.03% 2004− 2019

Cambodia 28 7 95 8.32% 2002− 2019
Indonesia 58 8 74 6.48% 2007− 2019
Vietnam 59 37 428 37.48% 2002− 2019
Laos 10 3 11 0.96% 2014− 2019
Malaysia 32 9 121 10.60% 2002− 2019
Philippine 22 17 144 12.61% 2002− 2019
Myanmar 11 3 7 0.61% 2013− 2019
Thailand 31 16 210 18.39 % 2002− 2019
Brunei 2 1 6 0.53% 2013− 2018
Total 259 104 1142 100.00%
H6B. External audit quality is associated positively with “monitoring benefits” and negatively with “monitoring cost”.
Finally, external audits are expected to enhance the internal governance quality. It is an important factor in governance mecha
nisms for shareholders to monitor management (Watts and Zimmerman, 1990; Herda et al., 2014). For example, banks with low CEO
negotiation power will have poor performance. In such cases, banks need higher quality internal governance practices to monitor
management (including the CEO). Thus, we propose hypothesis H6C as follows:
H6C. External audit quality is negatively associated with the CEO negotiation power.
5. Data and research design
5.1. Data
The study uses the data for 2002− 2019 of banks from 10 ASEAN countries, viz., Vietnam, Indonesia, Philippines, Laos, Cambodia,
Singapore, Myanmar, Malaysia, Thailand, and Brunei. Based on the list of commercial banks whose data is available on Bankscope
(Orbis Bank Focus) database, we exclude all Islamic banks because they have corporate governance different from conventional banks
(Nguyen, 2021b). Then, we exclude banks that do not publish annual reports in English or provide risk governance structure infor
mation. Most of the data of the remaining banks are related to financial information collected from the Bankscope. Any missing data
from the Bankscope was collected manually from financial statements and other published sources. Corporate governance information
was collected manually from annual reports and other documents published by the banks and the countries’ stock exchanges. Our final
data includes 1142 observations (Table 1).
5.2. Measures of variables
5.2.1. Measures of risk governance structure

The first risk governance structure variable, the audit committee size (denoted as ACS), is measured as the total number of members
on a bank audit committee at the end of each fiscal year. If the bank has no audit committee that year, the value of ACS is zero. This
measure was applied in some literature (Nguyen and Dang, 2020). As a general rule, the greater the number of members in the audit
committee, the larger the audit committee size.
Bank audit committee independence (denoted as ACI) is measured as a proportion of the number of independent directors to the
total number of members of the committee. Following prior studies, bank board directors are classified into three categories: inside,
gray, and independent/outside (Hermalin and Weisbach, 2001; Adams and Mehran, 2003). Inside directors are current or former
employees of the banks or their immediate family members (such as parents, children, siblings, in-laws, etc.,). We define independent
directors as those who are not already insiders to the bank’s power structure.
The financial and accounting experts on the audit committee (denoted as FAE) are measured as the number of members with a
financial or accounting degree/experience as a percentage of the total number of members on the committee. We expect that the higher
the proportion of financial and accounting experts on an audit committee, the higher will be the quality of bank risk governance. A
financial or accounting expert is an individual with a degree or experience in these fields, as defined in the literature (Custódio and
Metzger, 2014; Suprianto et al., 2017).
Audit committee activity is important for monitoring and advising functions. Like Vafeas (1999), we used the meeting frequency of
audit committees as a proxy for their busy activity (denoted as AMF) in a given fiscal year. AMF is measured as the number of meetings
in a year, both online and offline.
Stand-alone risk committee existence is a dummy variable (denoted as SRC) which is 1 if the bank has a stand-alone risk committee
and 0 otherwise. The risk committee is an additional part of bank risk governance. We consider banks as having a stand-alone risk
committee if their annual reports of their board committees include the term “risk” such as “Board Risk Committee”, “Risk Policy
Committee”, “Risk Management Committee”, “Risk and Assets Committee” and “Risk and Compliance Committee”.
Finally, external audit quality is a dummy variable (denoted as BIG4) which is 1 if the bank uses an external audit service distinct
7
from the Big Four audit companies (the four largest external audit companies, KPMG, Ernst, and Young, Deloitte, and Price Waterhouse
Cooper). Banks tend to choose the Big Four to provide external audit services, which is an indication of their high external audit
quality. The literature finds that the Big Four have sought to differentiate themselves from other auditors by investing more in
reputation capital (Beatty, 1989), and are consequently viewed as providing a higher quality audit service based on their perceived
competence (by virtue of their heavy spending on auditor training facilities and programs), and independence (by virtue of their size
and a large portfolio of clients which presumably gives them the financial strength to stand-up to, or walk away from, a client if
necessary) (Khurana and Raman, 2004).
5.2.2. Measures of “scope of operation”

This study applies three measures of the banks’ “scope of operations”, viz., bank size, bank age, and bank revenue diversification
index.
- Bank size (SIZE) is calculated as the natural logarithm of total assets suggested by Boone et al. (2007) and Linck et al. (2008a). Thus,
the more the SIZE value, the larger the bank.
- Bank age (BAGE) is the number of years since a bank was established; the higher the BAGE, the more complex banks are.
- Revenue diversification index (DIV) is calculated using the formulae of Laeven and Levine (2009) and Demirgüç-Kunt and Huizinga
(2010). It captures the variations in the two components of net operating income: net interest income and other operating income.
DIV is calculated as:
⃒ ⃒
⃒Net interest income − Other operating income⃒
1 − ⃒⃒ ⃒
⃒ (1)
Total operating income
A higher DIV indicates a more diversified bank and more complex activities.
5.2.3. Measures of monitoring benefits and monitoring costs

The study uses free cash flow as a measure of the manager’s opportunities for private benefits. Jensen (1986) argued that free cash
flow generates agency conflicts because managers in firms with high free cash flow have incentives to use it for private benefits, rather
than increase shareholder wealth. Free cash flow has been used to measure private benefit in various studies (Boone et al., 2007;
Nguyen and Nguyen, 2018). The more opportunities for managers to extract “private benefits”, the greater is the benefit of monitoring.
Based on the suggestion of Boone et al. (2007), free cash flow is defined as:
Earnings + Depreciation − Capital Expenditures
Free Cash Flow (FCAF) = (2)
Total Assets
Capital expenditures comprise interest expense on non-customer deposits plus dividends if any. Interest expense on a customer
deposit is treated as the cost of goods sold and therefore, not added to capital expenditure. The more the value of free cash flow, the
higher are the manager’s opportunities for private benefits.
As suggested by Boone et al. (2007), we used the rationale for CEO ownership. The literature agrees that the CEOs can hold a large
ownership stake to mitigate the agency problems that arise from a costly monitoring environment (Demsetz and Lehn, 1985; Him
melberg et al., 1999). Thus, although CEO ownership might not directly increase the costs of monitoring, its endogenous correlation
with monitoring costs makes it a reasonable proxy.
5.2.4. Measures of the CEO negotiation power

Following Boone et al. (2007) and Linck et al. (2008a), the CEO negotiation power is measured by the CEO tenure (CEOT) and CEO
age (CEOA), which are calculated as the number of years as the bank CEO and the CEO’s age respectively.
5.2.5. Measures of other control variables

This study used some additional variables as control variables, as they can help in reducing biases in the coefficient estimates due to
omitted variables. Hence, to provide a further understanding of the forces that may affect the risk governance structure, the bank-
specific control variables are as follows:
Lag(ROA) denotes the prior period performance in which performance is measured by the return on total assets (ROA). The average
total assets are simply the arithmetic mean of the total assets in t and t-1 periods. It is included because performance in prior periods
may influence the bank board structure or risk governance structure (Boone et al., 2007). For example, a firm may hire more inde
pendent directors after it performs poorly, suggesting a negative relationship between the prior year’s bank performance and the
percentage of independent directors. In addition, Vafeas (1999) found that firms met more frequently after performing poorly in the
prior period.
EAR refers to the bank capital ratio that is measured as the total equity divided by total assets. Bank capital may also affect the
board structure, as mentioned in the literature. There exists, as expected, a positive relationship between the capital ratio and risk
governance structure. Banks having a high capital ratio also have a lower level of debt. Accordingly, Flannery and Sorescu (1996) posit
that debt is one of the most important market monitoring mechanisms to discipline bank managers. Thus, if there is a lack of such
monitoring mechanisms, other bank internal governance techniques may become more important.
Lag(MER) indicates prior period merger and acquisition activity (M&A) (if any), measured by a binary or dummy variable that
equals 1 for a bank with merger and acquisition activity in that year and 0 otherwise. Recent merger and acquisition activity may affect
8
Table 2
Summary of Definition and Source of Variables.
Variables Definitions Sources
Dependent variables
Audit committee size (ACS) The total number of members on bank audit committee Annual report, other bank/
stock exchange reports
Audit committee independence (ACI) The number of independent directors as a percentage of the total number of members Annual report, other bank/
on audit committee stock exchange reports
Financial and accounting experts on The number of financial or accounting experts as a percentage of the total number of Annual report, other bank/
audit committee (FAE) members on the audit committee stock exchange reports
Audit committee meeting frequency The number of the audit committee meetings in a year Annual report, other bank/
(AMF) stock exchange reports
Stand-alone risk committee (SRC) A dummy variable is 1 if the bank has a stand-alone risk committee and 0 otherwise. Annual report, other bank/
External audit quality (BIG4) A dummy variable is 1 if the bank uses external audit service from Big 4 audit Annual report, other bank/
companies stock exchange reports
Independent variables:
Scope of operation
Bank size (SIZE) The natural logarithm of a bank’s total assets Annual report, other bank/
Bank age (BAGE) is the number of years since a bank was established Annual report, other bank/
Diversification index was defined as:
⃒ ⃒
Diversification (DIV) ⃒Net interest income − Other operating income⃒ Calculated from Bank Scope
1 − ⃒⃒ ⃒
Total operating income ⃒
Monitoring benefit and monitoring cost
Monitoring benefit:
Free cash flow is calculated as (earning-depreciation- capital expenditure)/Total
Free cash flow (FCAF) Calculated from Bank Scope
assets
Monitoring cost:
Annual report, other bank/
CEO ownership (CEOW) The rationale for CEO ownership
CEO age (CEOA) The CEO’s age in years
CEO tenure (CEOT) The number of years as the bank CEO
Control variables:
Capital ratio (EAR) The bank’s total equity divided by its total assets Calculated from Bank Scope
Lag(ROA) The return on average total assets at year t-1 Calculated from Bank Scope
Lag(MER) The prior period M&A activity Calculated from Bank Scope
Lag(BOZ) The number of board members at year t-1
Note: This table summarizes all the variables related to the testing of hypotheses H1-H6. Column 1 shows the list of variables, and Column 2 their
definitions. Column 3 explains the source of these variables.
the bank board and its committee structure (Adams and Mehran, 2008; Boone et al., 2007). For example, the positive relationship
between the bank board size and its committee size, prior period mergers, and acquisitions activity may reflect the addition of directors
from an acquired bank’s board and its committees.
Finally, following literature, including Boone et al. (2007) and Linck et al. (2008a), lagged values of board size (Lag(BOZ)) have
been included in our model to capture the relationship between different risk governance structure variables. For example, Boone et al.
(2007) found a positive relationship between the percentage of independent directors and board size. If the board is larger, its
sub-committee becomes larger, more independent, and contains more expertise, i.e., the risk governance structure will also change.
Lagged values of the variables are used to reduce the endogeneity of the variable.
5.3. Empirical models
The following Eq. 3 are formulated to test the eighteen specific hypotheses for audit committee size (H1A to H1C), audit committee
independence (H2A to H2C), financial and accounting experts on audit committees (H3A to H3C), audit committee meeting frequency
(H`4A to H4C), stand-alone risk committee (H5A to H5C), and external audit quality (H6A to H6C), in response to the theoretical and
empirical discussions in Section 2.2. Our model is shown in the following equations.
RGSit = α0 + α1 BAGEit + α2 BSIZEit + α3 DIVit + α4 FCAFit + α5 CEOWit + α6 CEOTit + α7 CEOAit + α8 EARit + α9 Lag(ROA)it
+ α10 Lag(MER)it + α11 Lag(BOZ)it +αi + αt + αc + εit (3)
9
Table 3
Descriptive statistics for main variables.
Variable Obs Mean Std. Dev. Min p25 p50 p75 Max
ACS 1,142 3.66 1.43 0.00 3.00 3.00 4.00 11.00

ACI 1,142 0.39 0.38 0.00 0.00 0.33 0.75 1.00
FAE 1,142 0.49 0.25 0.00 0.33 0.50 0.67 1.00
AMF 1,142 9.69 7.25 0.00 4.00 8.00 12.00 77.00
SRC 1,142 0.80 0.40 0.00 1.00 1.00 1.00 1.00
BIG 1,142 0.64 0.48 0.00 0.00 1.00 1.00 1.00
BAGE 1,142 36.45 27.23 1.00 18.00 25.00 52.00 167.00
SIZE 1,142 9.75 0.79 6.37 9.20 9.76 10.37 11.63
DIV 1,142 0.12 9.00 − 307.84 0.31 0.49 0.69 1.00
FCAF 1,142 0.01 0.32 − 7.14 0.00 0.01 0.02 2.37
CEOW 1,142 0.00 0.02 0.00 0.00 0.00 0.00 0.20
CEOT 1,142 4.76 4.46 1.00 2.00 3.00 6.00 32.00
CEOA 1,142 52.76 8.46 28.00 47.00 53.00 58.00 96.00
ROA 1,142 0.01 0.02 − 0.72 0.01 0.01 0.01 0.06
MER 1,142 0.09 0.29 0.00 0.00 0.00 0.00 2.00
BOZ 1,142 8.96 2.99 3.00 7.00 9.00 11.00 20.00
EAR 1,142 0.11 0.09 − 0.29 0.07 0.10 0.13 0.99
Note: This table presents descriptive statistics for all the main variables used to test the hypotheses. The Columns show the number of observations
(Obs.), mean, standard deviation (Std. Dev.), minimum (Min.), 25th quartile (P25), 75th quartile (P75), and maximum (Max.). See Table 2 for
variable definitions.
Where RGS is a vector of risk governance structure variables, including audit committee size (ACS), audit committee independence
(ACI), financial and accounting experts on the audit committee (FAE), audit committee meeting frequency (AMF), stand-alone risk
committee existence (SRC), and external audit quality (BIG4). All the variables were defined in Section 5.2 and summarized in Table 2.
α1 − α11 are the parameters to be estimated; α0 is a constant term, αi is bank fixed effect, αt is year fixed effect, αc is a country fixed
effect, and ε is the idiosyncratic error term.
The most popular estimation methods are the fixed effect (FE) and random effect (RE) with panel data. However, there are some
arguments about the choice of FE or RE in the estimation models related to corporate governance. Some prior studies argue that
corporate governance variables, which relatively do not vary over time, should not use the fixed effect method (Aljughaiman and
Salama, 2019; Huang and Wang, 2015). The fixed effect requires continuous variations in the panel data to generate inaccurate results
(Pathan, 2009). This study, however, investigates bank corporate governance in ASEAN regions, which is a dynamic area. The bank’s
corporate governance also fluctuates over time. Therefore, we apply Hausman’s test to decide the estimation method to be used. In
summary, this study uses FE or RE to test the hypotheses H1 to H4 by estimating Eq. 3. To test the hypotheses H5 (H5A-H5C) and H6
(H6A-H6C), we use the maximum-likelihood logit model using the Stand-alone Risk Committee (SRC) and External Audit Quality
(BIG4) as binary variables. We also use the two-stage least square (2SLS) to treat potential endogeneity issues as a robustness test.
6. Empirical results and discussion
6.1. Descriptive statistics and correlation matrix
Table 3 presents the descriptive statistics for the main variables. The corporate governance structure of banks can vary significantly
across different countries. The proportion of independent directors on audit committees (ACI) ranges from 0% to 100 %, and the mean
is 39 %. The mean of the audit committee size (ACS) reaches 3.66, with a minimum value of 0, and maximum value of 11 members. The
audit committee size of ASEAN commercial banks is smaller than that of commercial banks in developed countries, at 12 members on
average (Sun and Liu, 2014). In particular, the share of independent members in these commercial banks is quite low, only 23 % on
average. The proportion of independent members, according to Sun and Liu (2014) is 75.3 %. The proportion of experts in financial
accounting is 49 %. The mean number of audit committee meetings is 9.69 times a year; this is not very high. The stand-alone risk
committee (SRC) and external audit quality (BIG4) have mean values higher than the average. This indicates that more and more banks
in ASEAN countries have stand-alone risk committees and use the Big Four audit services.
Table 4 presents the Pearson’s Correlation between the variables. The largest absolute value is 0.712 for a positive correlation
between income diversification (DIV) and free cash flow (FCAF), indicating that there are no multi-collinearity problems because they
are less than 0.80 (Kennedy, 2008). In addition, in a multivariate setting, all average variance inflation factors (a post-estimation
measure) are lower than 4. This also suggests that multi-collinearity among regressors should not bias the coefficient estimates in
the regression model. However, Pearson’s Correlation measures may be highly unreliable. We, therefore, apply multivariate regression
analyses of the respective regression equations to test the hypotheses.
6.2. Determinants of risk governance results
Table 5 includes six regressions that report on the testing of the six hypotheses for risk governance structure determinants by
estimating regression Eq. 3 using FE/RE and the Logit method. Hypotheses H1A-H1B testing results were presented in regression 1. The
10
Q.K. Nguyen
Table 4
Correlation matrix.
ACS ACI FAE AMF SRC BIG BAGE SIZE DIV FCAF CEOW CEOT CEOA ROA MER BOZ EAR
ACS 1.000
ACI 0.076 1.000
FAE − 0.049 0.106 1.000
AMF 0.165 0.035 0.139 1.000
SRC 0.111 0.246 0.017 0.056 1.000
BIG 0.099 0.054 0.059 − 0.006 0.100 1.000
BAGE 0.126 0.291 ¡0.075 0.045 0.174 − 0.054 1.000
11
SIZE 0.123 0.347 ¡0.113 0.135 0.204 0.112 0.556 1.000

DIV − 0.020 0.014 − 0.022 0.003 0.003 − 0.015 0.026 0.139 1.000
FCAF − 0.026 0.018 − 0.022 − 0.009 0.008 0.008 0.004 0.114 0.712 1.000
CEOW − 0.163 0.080 0.052 ¡0.088 ¡0.103 0.042 0.014 − 0.011 0.013 0.005 1.000
CEOT − 0.012 0.063 0.087 ¡0.082 ¡0.077 ¡0.071 − 0.007 − 0.031 − 0.005 0.146 0.033 1.000
CEOA 0.119 0.389 − 0.055 ¡0.014 0.087 − 0.032 0.297 0.263 − 0.017 0.011 0.071 0.338 1.000
ROA 0.006 − 0.029 0.030 0.033 − 0.004 0.063 0.008 0.007 0.081 0.154 0.044 0.076 0.066 1.000

MER 0.082 0.077 0.003 0.151 0.086 0.051 0.018 0.122 ¡0.096 ¡0.130 ¡0.067 0.078 ¡0.074 − 0.043 1.000
BOZ 0.269 0.375 ¡0.096 0.184 0.231 ¡0.062 0.509 0.497 0.027 − 0.023 − 0.036 − 0.046 0.302 0.078 0.074 1.000
EAR 0.014 0.116 0.039 0.005 0.068 0.017 − 0.025 ¡0.273 − 0.009 0.014 0.031 0.033 − 0.002 0.177 ¡0.075 − 0.004 1.000
Note: The table shows Pearson pair-wise correlation matrix. Bold text indicates statistical significance at a 5% level or better. See Table 2 for variable definitions.
Q.K. Nguyen
Table 5
Determinant of risk governance structure results.
ACS ACI FAE AMF SRC BIG4
Dependent variable
(1) (2) (3) (4) (5) (6)
Co-eff t-stats Co-eff t-stats Co-eff t-stats Co-eff t-stats Co-eff t-stats Co-eff t-stats
Independent variables
Scope of operation
BAGE 0.04* 1.74 0.00* 1.77 0.03*** 8.34 − 0.02 − 0.70 0.02*** 3.25 0.01*** 2.65
SIZE 0.07*** 2.79 − 0.00 − 0.54 0.01*** 3.14 0.16** 2.08 0.16 1.40 0.44*** 4.39
DIV − 0.01 − 1.27 − 0.00 − 0.27 0.00 0.43 0.01 0.69 − 0.00 − 0.26 − 0.02 − 1.24
Monitoring benefit
FCAF 0.26* 1.82 0.02** 1.97 − 0.02 − 0.78 − 0.21 − 0.51 0.08 0.26 0.27 0.77
Monitoring cost
CEOW ¡15.12*** − 7.08 ¡0.08* − 1.78 ¡1.09*** − 3.12 5.58 0.89 ¡13.81*** − 3.36 5.53 1.35
12

CEOT ¡0.05*** − 4.59 − 0.00 − 1.44 − 0.00 − 0.69 ¡0.07** − 2.36 ¡0.05*** − 2.87 ¡0.04*** − 2.84
CEOA 0.01 1.16 0.00 0.23 0.00 0.41 − 0.01 − 0.81 0.01 1.22 − 0.00 − 0.52
Control variables
Lag(ROA) 1.20 1.07 − 0.04 − 0.30 0.32* 1.75 1.94 0.58 − 1.68 − 0.53 17.29*** 3.21

Lag(MER) -0.28** − 2.03 ¡0.04** − 2.07 − 0.03 − 1.33 0.32 0.81 0.03 0.11 0.16 0.71
Lag(BOZ) 0.01 0.69 0.00 0.56 − 0.00 − 1.28 0.08* 1.85 0.10*** 2.95 ¡0.05* − 1.94
EAR 0.69* 1.67 0.01 0.15 ¡0.17** − 2.46 − 0.53 − 0.43 3.86*** 2.73 1.60 1.73
Year dummy yes yes yes yes No No
Countries dummy yes yes yes yes No No
Obs 1141 1141 1141 1141 1141 1141
Estimation method FE RE FE RE Logit Logit
Note: This table presents the estimation results of Eq. 3. Regressions (1) to (6) present the estimation with FE/RE or Logit methods for dependent variables: audit committee size (1), audit committee
independence (2), financial and accounting experts on audit committee (3), audit committee meeting frequency (4), risk committee existence and (5) external audit quality (6) respectively. The Hausman
test performed the choice of FE or RE. ***, **, and * indicates statistical significance at 1%, 5%, and 10 %, respectively. See Table 2 for variable definitions.
coefficient on ACS is positive and significant with the SIZE and BAGE. The sign of coefficient on ACS with DIV is negative but not
significant at the 10 % level. Although not all three coefficients are significant, these results well support our H1A hypothesis that the
audit committee size positively relates to a bank’s scope of operation. The results are consistent with those of Boone et al. (2007) and
Linck et al. (2008a), who found that the board size had a positive relationship to non-bank firms’ scope of operation. Hypothesis H1B
predicts that the audit committee size is related positively to “monitoring benefits” and negatively to “monitoring costs”. Regression 1
shows that the coefficient on the FCAF is positive and statistically significant, indicating that the audit committee size is positively
associated with the manager’s “private benefits” (i.e., positively associated with monitoring benefits). As expected, the coefficient on
CEOW is negative and statistically significant. Thus, the overall monitoring hypothesis for the bank audit committee size, i.e., H1B, is
strongly supported. These results are consistent with those of Boone et al. (2007), who concluded that the board size is related
positively to “monitoring benefits” and negatively to “monitoring costs” for non-bank firms. As expected, the coefficient on CEOT is
negative and statistically significant. However, the coefficient on CEOA is positive but not statistically significant. Thus, hypothesis
H1C is fairly supported.
Concerning hypothesis H2A, audit committee independence is expected to be positively related to its “scope of operations”, as
larger and more complex banks need more independent directors on audit committees to bring innovation, diversity, and indepen
dence to their decision-making process. Regression 2 of Table 5 shows that BAGE coefficients are still positive and statistically sig
nificant with ACI. The coefficients on SIZE and DIV are negative but not significant with ACI. These results are fairly supportive of H2A.
Regression 2 results of Table 5 show that the coefficient on FCAF is significantly positive with ACI. Moreover, the relationship between
CEOW and ACI is negative. This result is consistent with the non-bank evidence of Linck et al. (2008a) but not that of Boone et al.
(2007), who found no statistically significant relationship between “monitoring costs” and board independence. Overall, these results
support hypothesis of H2B. The coefficients on CEOT and CEOA are negative and positive respectively but not statistically significant.
These results do not support hypothesis H2C.
Regression 3 of Table 5 represents FE estimates of regression Eq. 3 for testing the three hypotheses H3A, H3B, and H3C. Each is
related to the determinants of accounting and financial expertise on the audit committee (FAE). Concerning hypothesis H3A, the
coefficient on BAGE and SIZE are positive and significant with FAE. The coefficient on DIV is positive but not significant. These results
well support hypothesis H3A, i.e., accounting, and financial experts on the audit committee positively relate to the scope of operation.
This finding supports previous studies (Nguyen, 2021a,b) and provides an important indication for banks to structure risk governance.
Moreover, the coefficient on CEOW is negative and significant, with FAE indicating that the presence of financial and accounting
experts on audit committees negatively relates to the directors’ “monitoring costs”; however, it does not positively relate to “moni
toring benefits” because the coefficient on FCAF is negative and insignificant with FAE. These do not support H3B hypothesis fully.
Finally, the coefficients on CEOT and CEOA are negative and positive respectively but not statistically significant. These indicate no
evidence of a relationship between financial and accounting experts on audit committees and the CEO negotiation power, i.e., this does
not support hypothesis H3C.
Regarding hypothesis H4A, the results in regression 4 show that the coefficient on SIZE is significantly positive with AMF. The
coefficient on BAGE and DIV, however, are not significant. These results fairly support hypothesis H4A. Similarly, the coefficient on
both FCAF and CEOW are not statistically significant. Hypothesis H4B, therefore, is not supported. The frequency of bank audit
committee meetings may be immune to monitoring requirements. As expected, the frequency is negatively associated with the CEO
negotiation power. In line with these predictions, the coefficients on CEOT and CEOA are negatively related to AMF. Although not all
coefficients of CEOT and CEOA are statistically significant (the coefficients of CEOA are not significant), they fairly support hypothesis
H4C. These results also support previous studies (Collier and Gregory, 1999; Greco, 2011) and provide implication for banks adjusting
audit committee activities.
Logit estimation of regression Eq. 3 related to hypotheses H5A, H5B, and H5C are reported in regression 5. For hypothesis H5A, the
Logit estimation shows that though the coefficients on BAGE and SIZE are positive with SRC, just one coefficient on BAGE is statis
tically significant. Therefore, it fairly supports hypothesis H5A, that stand-alone risk committee existence has a positive relationship to
the “scope of operation”. The coefficient on FCAF is positive with SRC but not significant. Further, the coefficient on CEOW is negative
and significant with SRC. These results indicate that the bank risk committee may not be related to the monitoring manager’s “private
benefits” but is negatively associated with the “monitoring costs”. Therefore, it partially supports hypothesis H5B. The coefficient on
CEOT was found to be negative and statistically significant, indicating that the stand-alone risk committee is negatively associated with
the CEO negotiation power. These results fairly support hypothesis H5C and are consistent with three theories as discussed in Section 3
and with the literature (Abdullah and Said, 2019; Aljughaiman and Salama, 2019; Brown et al., 2009) and provide implications for
banks considering whether they should establish a stand-alone risk committee.
Finally, in regression 6, the coefficients of BAGE and SIZE are positive and significant with BIG4. These results well support hy
pothesis H6A, i.e., that external audit quality has a positive relationship to the bank’s “scope of operation”, despite the coefficient on
DIV being negative and insignificant. These findings are consistent with Chow (1982) and Briozzo and Albanese (2020) and indicate
that the more complex a bank, the greater the need for high-quality external audit services. Both coefficients of FCAF and CEOW are
positive with BIG4 but not significant. This means that these results do not support hypothesis H6B. In other words, external audit
quality relates neither positively to the “monitoring benefits” nor negatively to the “monitoring costs”. This can be explained because
external audits may not have a role in interfering with the management of banks. Finally, the coefficient of CEOT is negative and
significant with BIG4, but the coefficient of CEOA is not significant. These results fairly support hypothesis H6C: the external audit
quality has a negative relation to the CEO negotiation power. These findings are consistent with three hypotheses. Based on these
findings, banks can consider whether they should use high-quality audit services.
Although not all eighteen hypotheses were supported, we have strong evidence that the audit committee structure has a positive
13
Q.K. Nguyen
Table 6
2SLS Regression Results for the Determinants of Risk Governance Structure.
ACS ACI FAE AMF SRC BIG4
Dependent variable
(1) (2) (3) (4) (5) (6)
Co-eff t-stats Co-eff t-stats Co-eff t-stats Co-eff t-stats Co-eff t-stats Co-eff t-stats
Independent variables
Scope of operation
BAGE 0.04*** 3.57 0.07*** 3.40 0.01*** 2.91 − 0.01 − 0.45 0.02*** 3.52 0.03** 2.31
SIZE − 0.09 − 0.55 − 0.31 − 1.10 − 0.08 − 1.24 0.01* 1.74 − 0.07 − 1.40 − 0.12 − 1.04
DIV − 0.02 − 1.53 − 0.01 − 1.27 − 0.00 − 0.89 − 0.01 − 0.47 − 0.00 − 0.96 − 0.01 − 1.38
Monitoring benefit
FCAF 0.45** 2.00 0.26*** 2.18 0.02** 2.49 0.87 1.06 0.07* 1.92 0.17 1.01
Monitoring cost
CEOW ¡12.00*** − 7.35 ¡0.03* − 1.72 − 0.48 − 0.77 − 3.58 − 0.32 ¡2.57*** − 3.26 0.83 0.74
14

CEOT − 0.00 − 0.06 0.01 1.47 0.01*** 2.81 ¡0.09* − 1.73 − 0.00 − 0.82 − 0.00 − 0.35
CEOA ¡0.01* − 1.65 ¡0.04*** − 2.82 ¡0.01*** − 3.65 ¡0.06* − 1.77 ¡0.01** − 2.06 ¡0.02** − 2.30
Control variables
Lag(ROA) 1.56 0.90 1.83 0.74 1.45* 1.63 27.06** 2.42 0.61 0.66 3.05* 1.79

Lag(MER) 0.09 0.51 0.19 1.07 0.00 0.10 1.81** 2.22 0.06 0.97 0.12 1.36
Lag(BOZ) − 0.03 − 1.00 − 0.23*** − 3.59 − 0.05*** − 3.40 − 0.09 − 0.72 − 0.05** − 2.51 − 0.11*** − 2.62
EAR 0.48 0.66 − 0.17 − 0.19 − 0.08 − 0.31 4.20* 1.88 0.22 0.75 0.07 0.17
Cons 4.06** 2.54 4.52 1.55 1.80** 2.58 15.77*** 5.82 1.67*** 2.78 2.66** 2.04
LM test (p-value) 0.00 0.00 0.01 0.00 0.00 0.04
Hansen J test (p-value) 0.21 0.09 0.52 0.13 0.92 0.36
Endogeneity test (p-value) 0.00 0.00 0.00 0.10 0.00 0.00
Obs 1141 1141 1141 1141 1141 1141
Note: This table presents the estimation results of Eq. 3 by applying the 2SLS method. Regressions (1) to (6) present the estimation for each dependent variable audit committee size (1), audit committee
independence (2), financial and accounting experts on audit committee (3), audit committee meeting frequency (4), risk committee existence and (5) external audit quality (6) respectively. ***, **, and *
indicate statistical significance at 1%, 5%, and 10 %, respectively. See Table 2 for variable definitions.
Q.K. Nguyen
Table 7
2SLS Regression Results for the Determinants of Risk Governance Structure at different Bank Risk Levels.
Low-risk banks High-risk banks
Dependent variable ACS ACI FAE AMF SRC BIG4 ACS ACI FAE AMF SRC BIG4
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
Scope of operation
BAGE 0.05*** 0.05*** 0.01** ¡0.13*** 0.03*** 0.03 0.04** 0.09*** 0.01** 0.13* − 0.01 0.00
SIZE 0.02 − 0.08 − 0.02 0.24 − 0.03 − 0.04 0.50* 1.72*** 0.21** 2.25* 0.24** 0.07
DIV − 0.01 0.00 0.00 − 0.02 0.00 0.00 − 0.21 0.38 0.05 3.16** 0.11** 0.23***
Monitoring benefit
FCAF 0.29* 0.09** 0.00* 1.40 0.00* 0.02 0.53* 1.12 0.12* ¡3.40* 0.37 0.55***
Monitoring cost
CEOW ¡14.43*** ¡1.00** ¡0.04* ¡1.32** ¡1.40* 2.42** ¡6.56*** 7.17 0.47 − 18.41 ¡2.38** − 0.29
15

CEOT 0.00 0.00 0.01 ¡0.20*** − 0.01 0.00 − 0.02 ¡0.02*** ¡0.00** 0.07 ¡0.02*** ¡0.03***
CEOA ¡0.02* ¡0.02*** ¡0.01*** 0.01 ¡0.02*** ¡0.03** ¡0.01* ¡0.01** ¡0.00* ¡0.11** ¡0.01** 0.01*
Control variables
Lag(ROA) 2.97 1.31 0.93 16.20*** 1.32 3.28* − 10.15 13.39 8.70*** 200.92*** − 3.16 − 3.30

Lag(MER) 0.31 0.14*** − 0.05 0.96 0.16* 0.16 0.41** − 0.71** − 0.10* 3.03*** − 0.06 0.11
Lag(BOZ) − 0.01 − 0.11*** − 0.02* 0.11 − 0.05*** − 0.07 0.01 0.18** 0.03** − 0.23 0.02 − 0.04**
EAR 3.07** 2.12 0.12 − 1.60 2.00*** 1.33 − 0.12 2.98 0.49** − 0.42 0.33 0.27
Cons 2.92** 1.37 1.06*** 12.53 1.37*** 2.01*** 6.63** − 15.93*** − 1.56 35.01*** − 1.57 − 0.18
LM test (p-value) 0.00 0.00 0.00 0.00 0.00 0.09 0.00 0.08 0.05 0.00 0.02 0.04
Hansen J test (p-value) 0.17 0.10 0.33 0.14 0.87 0.20 0.22 0.20 0.12 0.34 0.19 0.89
Endogeneity test (p-value) 0.00 0.00 0.00 0.00 0.00 0.00 0.03 0.00 0.00 0.00 0.05 0.03
Obs 570 570 570 570 570 570 570 570 570 570 570 570
Note: This table presents the coefficients by estimating Eq. 3 applying the 2SLS method for two groups of data (high and low-risk banks). Regressions (1) to (6) present the estimation for low-risk banks.
Regressions (7) to (12) present the estimation for high-risk banks. ***, **, and * indicate statistical significance at 1%, 5%, and 10 %, respectively. See Table 2 for variable definitions.
relationship to a bank’s “scope of operation”, and the trade-off between and management monitoring costs and benefits, but a negative
relation to a bank CEO negotiation power. The results for the control variables provide further insights into the factors shaping bank
risk governance. The coefficient on Lag (MER) is negative and statistically significant on ACS and ACI, providing evidence that any
recent merger and acquisition activity is associated with smaller and less independent audit committees. This may be because, after
merger and acquisition activity, banks need to restructure corporate governance and do not want to have complex governance. Finally,
the equity on asset ratio (EAR) positively relates to the audit committee size and stand-alone risk committee existence.
6.3. Robustness tests
In this section, we provide some robustness tests. First, to treat the potential endogeneity, we estimated Eq. 3 by using the 2SLS
method. Regression 1 of Table 6 presents the determinants for audit committee size (ACS), as specified by Eq. 3. The findings remained
fairly unchanged, as with those reported in Table 5. The coefficient on BAGE is positive and statistically significant for ACS but not for
SIZE, which fairly supports hypothesis H1A. Coefficients FACF and CEOW are positive and negative significantly (strongly support
hypothesis H1B). The coefficient can explain the results in Table 6 relating to CEOT being no longer statistically significant. However,
the coefficient on CEOA is negative and significant at a 10 % level. It indicates that this is still supportive of hypothesis H3C, although it
is not strong.
Regression 2 of Table 6 reports audit committee independence (ACI) findings as specified by Eq. 3. The results also remained the
same as those in Table 5, with the coefficients on BAGE and FCAF significantly stronger. Thus, the results support the two hypotheses
H2A and H2B. While the results in Table 5 do not support hypothesis H2C, the coefficient on CEOA is negative and significant at 1%
level with ACI in Table 6, thus indicating that the results may support hypothesis H2C, although it is weak.
The findings for financial and accounting experts on audit committees in regression 3 show some differences with the results as
already reported in Table 5. The coefficient on SIZE becomes insignificant; however, it still does support hypothesis H3A. The coef
ficient on FCAF is positive and significant, partially supporting hypothesis H3B. The coefficient on CEOT and CEOA becomes signif
icant, but the sign is positive with CEOT and negative with CEOA. These results still do not support hypothesis H3C. The interpretation
of the results in regression 4 for audit committee meeting frequency in Table 6 is also similar to Table 5. However, the coefficient on
CEOA changes from insignificant to significant, consistent with the expectation and supporting hypothesis H4C well. Similarly, the
findings for SRC in regression 5 of Table 6 are the same in Table 5, with the critical difference of the coefficient on FCAF changing from
insignificant to significant and adding further support to hypothesis H5B. Finally, regression 6 still supports hypotheses H6A and H6C.
The results of the LM test and Hansen test report that the instruments are valid. Overall, even with direct control over endogeneity with
2SLS, this study provides evidence that risk governance was determined by the bank’s scope of operation, the trade-off between costs
and benefits of monitoring, and the CEO negotiation power.
Table 7 reports the 2SLS estimation results by the separation of low and high-risk banks. Our separation is based on bank risk,
measured by Z-score2 . High-risk and low-risk banks were defined as banks with Z-score higher and lower than the mean for all banks.
Related to the scope of operation, the results in Table 7 report that coefficients on BAGE are positive and significant in relation to the
majority of risk governance variables. However, we found only a significant positive association between SIZE and risk governance
structure variables in high-risk banks. This indicates stronger evidence about the relationship between the scope of operation and the
bank risk governance structure in high-risk banks than in low-risk banks.
Regarding the trade-off between the costs and the benefits of monitoring, the results show that the coefficients on FCAF and CEOW
are positive and negative, respectively. This is true for most of the risk governance structure variables in low-risk banks, while we find
the same results only for the relationship between FACF, CEOW, and ACS in high-risk banks. Thus, the findings indicate that the trade-
off between the cost and benefit of monitoring may be a better explanation for determining the risk governance structure in low-risk
banks.
On the contrary, we find stronger evidence about the relationship between the CEO’s power and risk governance structure in high-
risk banks. The coefficients on CEOA and CEOT are negative and significant for most of the governance structure variables in the high-
risk banks, instead of most of the coefficients for CEOA, which are not significant in low-risk banks. While hypotheses H2C and H3C
were not supported in our first results, they were well supported for high-risk banks, perhaps because high-risk banks focus more on
risk governance structure to deal with the CEO’s risk-taking than on the costs and benefits of monitoring. Although there is some
difference between low and high-risk banks, these results are consistent with our first results and support our hypotheses well.
Similarly, as another robustness test, we applied the 2SLS method to estimate Eq. 3 for two groups of countries (i.e., high, and low
institutional quality). The literature reveals that firms improve their risk governance mechanisms to meet the regulatory pressures that
demand more monitoring and management of the risk management processes. However, these improvements depend on the insti
tutional quality of each country (Bermpei et al., 2018; Uddin et al., 2020). In this study, we successfully investigated whether the
determinants of the bank risk governance structure in high and low institutional quality are different. The data were separated into
high and low institutional quality based on the Quality of Governance Index - a key proxy for institutional quality (Kaufmann et al.,
2009), which collected from the World Bank. Countries in the high (low) institutional quality group have a Quality of Governance
Index higher (lower) than the mean value.
Regarding the scope of operation, the results in Table 8 show that the coefficients on BAGE are positive and significant, with most of
2
Z-score is calculated by [ROA + (Equity/Total assets)]/Std(ROA).
16
Q.K. Nguyen
Table 8
2SLS Regression Results for the Determinants of Risk Governance Structure in different Institutional Quality Countries.
Low institutional quality High institutional quality
Dependent variable ACS ACI FAE AMF SRC BIG4 ACS ACI FAE AMF SRC BIG4
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
Scope of operation
BAGE 0.02* 0.01*** 0.01** − 0.13 0.12*** 0.02** 0.03** 0.08*** 0.06*** 0.08* 0.00 − 0.07
SIZE 0.02 0.00 − 0.04 0.02 − 0.21 − 0.04 − 0.29 0.82* 0.78** − 0.02 − 0.06 1.04*
DIV − 0.05 0.02*** − 0.03 − 0.06 0.12*** − 0.01 0.00 0.00 0.00 0.01 0.00 0.00*
Monitoring benefit
FCAF 3.34** − 0.22 0.24 5.58 2.31 0.67** 0.08 0.28** 0.19** − 0.21 0.04 0.24*
Monitoring cost
CEOW ¡13.24*** ¡1.09** 0.50 14.20 6.38 − 2.89 ¡9.23*** ¡5.78** ¡5.93** ¡42.58*** ¡1.87** ¡5.72**
17

CEOT ¡0.00** ¡0.01*** ¡0.02*** ¡0.23*** ¡0.08*** 0.00 − 0.01 − 0.02 − 0.02 − 0.05 ¡0.01** 0.02
CEOA ¡0.01** ¡0.01*** ¡0.02*** ¡0.22* ¡0.12*** ¡0.02** 0.01 0.00 − 0.01 ¡0.19*** 0.00 0.00
Control variables
Lag(ROA) 1.56 − 0.97 1.05* 16.34* 2.59 1.93*** − 5.32 7.33 8.74* 48.43* 5.07*** − 3.83
Lag(MER) 0.00 0.02 − 0.07 − 1.46 0.24 − 0.12 0.14 0.42** 0.33 2.59*** − 0.03 − 0.40

Lag(BOZ) 0.04 0.03*** − 0.04** 0.19 − 0.34*** − 0.07** 0.01 − 0.15** − 0.12*** − 0.18 − 0.01 0.11
EAR − 0.33 − 0.15 0.39 17.21*** 2.19 0.40 0.83 − 1.19 − 1.34** − 6.25*** 0.11 1.61
Cons 3.02*** − 0.40 1.58*** 1.67 7.63** 2.10*** 5.06*** 7.00** 7.38** 20.13** 1.54** − 8.36
LM test (p-value) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.02 0.04 0.00 0.02 0.03
Hansen J test (p-value) 0.13 0.24 0.17 0.22 0.17 0.15 0.29 0.11 0.07 0.15 0.53 0.84
Endogeneity test (p-value) 0.01 0.00 0.00 0.04 0.00 0.01 0.00 0.00 0.00 0.00 0.09 0.00
Obs 554 554 554 554 554 554 586 586 586 586 586 586
Note: This table presents the coefficients by estimating Eq. 3 applying the 2SLS method for two groups of data (banks in high and low institutional countries). Regressions (1) to (6) present the estimation
for banks in low institutional quality countries. Regressions (7) to (12) present the estimation for banks in high institutional quality countries. ***, **, and * indicate statistical significance at 1%, 5%, and
10 %, respectively. See Table 2 for variable definitions.
the regression in both high and low institutional quality countries. The coefficient on SIZE is positive and significant with ACI, FAE, and
BIG4 in regressions 8, 9, and 12. In contrast, the coefficients on DIV are positive and significant with ACI, SRC, and BIG4 in regressions
2, 5, and 12. Thus, the relationship between the scope of operation and the risk governance structure was not much different between
the two groups. Regarding the trade-off between the costs and benefits of monitoring, the results in Table 8 show that the coefficients
on FCAF and CEOW are positive and negative, respectively, with ACS, ACI, FAE, and BIG4 in regressions 1, 8, 9, and 12. While hy
pothesis H6B was not supported in our first results, it was well supported for banks in high institutional quality countries. The co
efficients on CEOT and CEOA are negative and significant, with most bank risk governance structure variables in low institutional
quality countries. While hypotheses H2C and H3C were not supported in our first results, they were strongly supported for banks in low
institutional quality countries. In the high institutional quality countries, we find only a negative relationship between CEOA and AMF
(regression 10), CEOT, and SRC (regression 11). Therefore, we find stronger evidence of the relationship between the CEO negotiation
power and bank risk governance structure in low institutional quality countries than in high institutional quality ones. This finding is
consistent with those of prior studies that information asymmetries are higher in low institutional quality countries; thus, firms need to
adopt appropriate mechanisms to control the CEOs’ opportunistic behavior.
Overall, after treating potential endogeneity problems and considering the differences between high and low-risk banks as well as
banks in high and low institutional quality countries, we find that the results support our hypothesis and offer evidence of the rela
tionship between the scope of operation, the trade-off between cost and benefit of monitoring, CEO negotiation power, and the bank
risk governance structure. However, these relationships in banks with high and low risk and high and low institutional quality
countries are not the same.
7. Summary and conclusion
This study examined the determinants of risk governance structure using a sample of 104 banks in ASEAN countries from 2002 to
2019. Specifically, we examined the determinants of audit committee size, audit committee independence, financial and accounting
experts on audit committees, audit committee meeting frequency, stand-alone risk committee existence, and external audit quality,
coming up with some very important findings. First, our results provide evidence that bank risk governance is positively associated
with the scope of operation. This relationship is not much different between banks with high and low risk as well as high and low
institutional quality countries. Second, this study finds that the bank risk governance structure relates positively to “monitoring
benefits” and negatively to “monitoring costs”. However, we do not find strong evidence in high-risk banks. Finally, this study provides
strong evidence about the negative relationship between the CEO negotiation power and bank risk governance structure. We find that
risk governance relates more significantly to CEO negotiation power in high-risk banks and banks in low institutional quality countries.
Our findings provide an important implication that regulators should not try to adopt a uniform standard for all banks regarding the
risk governance structure. Instead, they should provide guidelines therefor based on the banks’ scope of operation, the trade-off be
tween cost and benefit of monitoring, and the CEO negotiation power. Regulators should also consider a country’s institutional quality
to provide appropriate guidelines for each country. In addition, banks should consider their scope of operation, the trade-off between
monitoring cost and benefit, and the CEO negotiation power to structure their risk governance. They should also consider the level of
risk when setting up an appropriate risk governance structure. Due to the difficulties in collecting data from banks in ASEAN countries
(the majority do not publish much information about their corporate governance structure), we have limitations in variable measures.
Therefore, we recommend that future studies investigate more characteristics of bank risk governance by using data from other
countries.
Funding
This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors.
Declaration of Competing Interest
The authors report no declarations of interest.
Acknowledgment
The author would like to thank the editor and other anonymous reviewers for constructive comments and suggestions. We also
thank Dr. Pham Phu Quoc (University of Economics Ho Chi Minh City) and Dr. Le Ho An Chau (University of Lincoln) for all support.
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Research in International Business and Finance 60 (2022) 101575

Contents lists available at ScienceDirect

Research in International Business and Finance

Full length Article

Determinants of bank risk governance structure: A

E-mail address: nqkhai.sdh@gmail.com.

3. Theoretical literature review

4. Empirical literature review and hypothesis development

4.1. Audit committee size determinants

4.2. Independence of audit committee determinants

4.3. Financial and accounting expert on audit committee determinants

4.4. Audit committee meeting frequency determinants

4.5. Stand-alone risk committee determinants

4.6. External audit determinants

Singapore 6 3 46 4.03% 2004− 2019

5. Data and research design

5.2. Measures of variables

5.2.1. Measures of risk governance structure

5.2.2. Measures of “scope of operation”

5.2.3. Measures of monitoring benefits and monitoring costs

5.2.4. Measures of the CEO negotiation power

5.2.5. Measures of other control variables

5.3. Empirical models

ACS 1,142 3.66 1.43 0.00 3.00 3.00 4.00 11.00

6. Empirical results and discussion

6.1. Descriptive statistics and correlation matrix

6.2. Determinants of risk governance results

SIZE 0.123 0.347 ¡0.113 0.135 0.204 0.112 0.556 1.000

Research in International Business and Finance 60 (2022) 101575

CEO negotiation power

Research in International Business and Finance 60 (2022) 101575

CEO negotiation power

Research in International Business and Finance 60 (2022) 101575

CEO negotiation power

Research in International Business and Finance 60 (2022) 101575

6.3. Robustness tests

CEO negotiation power

Research in International Business and Finance 60 (2022) 101575

7. Summary and conclusion

Declaration of Competing Interest

The authors report no declarations of interest.

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