Chief risk officer and audit fee: An investigation from financial industries in Indonesia
DOI:
https://doi.org/10.24914/jeb.v27i1.9322Keywords:
Audit fee, CRO, ERM, firm risk, governanceAbstract
The appointment of a CRO (Chief Risk Officer) influences the implementation of ERM (Enterprise Risk Management), which reduces risk and lowers audit costs. Financial Services Authority Regulation No.17/2014 in Indonesia requires companies to have an RMC (Risk Management Committee), which is different from a CRO equivalent to a C-Level. This study examines the impact of a CRO on external audit costs. The data consists of financial companies listed on the Indonesia Stock Exchange (IDX) from 2011 to 2020. The results show that companies using a CRO have lower risk, thereby reducing audit costs. Additionally, the expertise of a CRO also impacts a higher ERM, which in turn affects the reduction of audit costs. This study contributes to the practical world by supporting the appointment of a CRO to reduce company risk. Thus, the company can deliver better performance.
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