TY - JOUR
T1 - The effect of enterprise risk management on financial performance and firm value
T2 - the role of environmental, social and governance performance
AU - Chairani, Chairani
AU - Siregar, Sylvia Veronica
N1 - Funding Information:
The first author would like to express gratitude to the Ministry of Education and Culture of the Republic of Indonesia for awarding the “Flagship Scholarships.” Both authors also would like to thank Universitas Indonesia for providing PITMA research grant.
Publisher Copyright:
© 2021, Emerald Publishing Limited.
PY - 2021/6/3
Y1 - 2021/6/3
N2 - Purpose: This study aims to examine the effect of enterprise risk management (ERM) on financial performance and firm value, as well as the moderating role of environmental, social and governance (ESG) performance. Design/methodology/approach: The samples in this study are listed companies in the ASEAN 5 (Indonesia, Malaysia, Philippines, Singapore and Thailand) during the years 2014–2018, with total observations of 680 firm-years. Fixed effect panel data regressions were used to test the hypotheses. The data was collected from Financial Report, Annual Reports and Thomson Reuters. Findings: The results show that ERM has a positive significant effect on financial performance and firm value. This paper also finds that ESG has a significant moderating role in increasing the effect of ERM on firm value. Further, this paper divides the samples into sensitive and non-sensitive industries and find a significant moderating role of ESG performance on firm performance for sensitive industries. Originality/value: Extant studies have not empirically examined the moderating role of ESG on the effect of ERM on firm performance and firm value. The findings have important implications in suggesting that firms need to analyze various threats and opportunities related to and ESG risks in achieving competitive advantage.
AB - Purpose: This study aims to examine the effect of enterprise risk management (ERM) on financial performance and firm value, as well as the moderating role of environmental, social and governance (ESG) performance. Design/methodology/approach: The samples in this study are listed companies in the ASEAN 5 (Indonesia, Malaysia, Philippines, Singapore and Thailand) during the years 2014–2018, with total observations of 680 firm-years. Fixed effect panel data regressions were used to test the hypotheses. The data was collected from Financial Report, Annual Reports and Thomson Reuters. Findings: The results show that ERM has a positive significant effect on financial performance and firm value. This paper also finds that ESG has a significant moderating role in increasing the effect of ERM on firm value. Further, this paper divides the samples into sensitive and non-sensitive industries and find a significant moderating role of ESG performance on firm performance for sensitive industries. Originality/value: Extant studies have not empirically examined the moderating role of ESG on the effect of ERM on firm performance and firm value. The findings have important implications in suggesting that firms need to analyze various threats and opportunities related to and ESG risks in achieving competitive advantage.
KW - ASEAN 5
KW - Enterprise risk management (ERM)
KW - Environmental
KW - Financial performance
KW - Firm value
KW - social and governance (ESG)
UR - http://www.scopus.com/inward/record.url?scp=85107492526&partnerID=8YFLogxK
U2 - 10.1108/MEDAR-09-2019-0549
DO - 10.1108/MEDAR-09-2019-0549
M3 - Article
AN - SCOPUS:85107492526
SN - 2049-372X
VL - 29
SP - 647
EP - 670
JO - Meditari Accountancy Research
JF - Meditari Accountancy Research
IS - 3
ER -