Determinants and Value of Enterprise Risk Management: Empirical Evidence from Germany
31 Pages Posted: 21 Feb 2016 Last revised: 26 Apr 2016
Date Written: March 17, 2016
Abstract
Enterprise risk management (ERM) has become increasingly relevant in recent years, especially due to an increasing complexity of risks and the further development of regulatory frameworks. The aim of this paper is to empirically analyze firm characteristics that determine the implementation of an ERM system and to study the impact of ERM on firm value. We focus on companies listed at the German stock exchange, which to the best of our knowledge is the first empirical study with a cross-sectional analysis for a European country. Our findings show that size, international diversification, and the industry sector (banking, insurance, energy) positively impact the implementation of an ERM system. In addition, our results confirm a significant positive impact of ERM on shareholder value.
Keywords: Enterprise risk management, firm characteristics, shareholder value
JEL Classification: G20, G22, G32
Suggested Citation: Suggested Citation