The direct and indirect effect of the existence of risk management on the relationship between audit committee and corporate social responsibility disclosure

Abstract

Purpose The purpose of this paper is to investigate the direct and indirect effect of the existence of risk management on the relationship between audit committee and corporate social responsibility (CSR) disclosure in Palestine. Design/methodology/approach The study utilizes a panel data of 31 Palestinian listed companies from 2010 to 2016. It also utilizes structural equation modeling (SEM) model. Findings The results of SEM model find a significant positive relationship of the existence of risk management, audit committee meeting and audit committee size with CSR disclosure. However, audit committee financial expertise has a significant negative relationship with CSR disclosure. The results also find a significant relationship of audit committee meeting and audit committee financial expertise with CSR disclosure through the existence of risk management. Practical implications This study is important to policymakers, accounting professionals and shareholders on the extent to which audit committee related to such committee efficiency in monitoring CSR disclosure. Social implications This study adds to the existing literature by investigating the direct and indirect effect of the existence of risk management on the relationship between audit committee and CSR disclosure in Palestine as one of the youngest market in region that assists to test the validity of agency theory in a young and small emerging market context. Originality/value It is the first study to investigate the direct and indirect effect of the existence of risk management on the relationship between audit committee and CSR disclosure in Palestine.