Risk governance structures and earnings stability in emerging market banking: Evidence of a robust null from Indonesia

This study examines whether formal risk governance structures are associated with earnings stability in Indonesian commercial banks. Using a balanced panel of 100 banks over FY2020–FY2024 (500 bank-year observations) drawn from public disclosures, we test whether Risk Management Committee size and board risk expertise predict earnings volatility, measured as the rolling three-year standard deviation of return on assets. Across pooled OLS, random effects, fixed effects, correlated random effects, first-difference and system GMM estimators, and across alternative volatility windows and lag structures, neither governance variable exhibits a robust association with earnings volatility. One fixed effects specification yields a significant negative coefficient on committee size, but it does not survive alternative windows, lags or dynamic estimation. The null is informative rather than underpowered: the design detects effects as small as 10.7% of mean earnings volatility. A parallel credit-risk model yields only weak evidence for board risk expertise (p = 0.076). Earnings stability is instead explained by the persistence of volatility, bank size and ownership-based business models, with regional development banks markedly the most stable. Indonesia’s COVID-19 loan restructuring relaxation also compressed the dependent variable. The findings caution against treating observable governance structures as sufficient indicators of earnings quality.