This study investigates the inter-relationship between audit committee effectiveness, bank efficiency and risk-taking in seven ASEAN countries for the period 2010–2019. By using three-stage least squares (3SLS) method, we contribute to literature the relationship between audit committee effectiveness and bank risk-taking by examining the mechanism behind this relation. Our results show that audit committee effectiveness reduces bank risk-taking through increasing bank efficiency. This study also finds that the association between audit committee effectiveness and bank risk-taking is bi-directional, i.e the higher audit committee effectiveness induces lower risk and vice versa.