An Empirical Analysis of Enterprise Risk Management and Firm's Value: Evidence from Pakistan
DOI:
https://doi.org/10.31384/jisrmsse/2020.18.1.8Keywords:
Enterprise risk management, non-financial firms, firm's value, Pakistan Stock ExchangeAbstract
Since the last few decades, the firms have shifted their focus towards risk management from traditional risk management practices to enterprise risk management. For this purpose, the current study is designed to investigate the critical firm's characteristics that influence firms to adopt enterprise risk management practices. The data for this study comprises of 65 non-financial firms during the period 2009 to 2017. Binary Logistic and robust least square method was administered to determine the relationship among variables. Empirical results revealed that large firms, firms with a higher return on assets, and firms having more independent directors on board leads towards the implementation of enterprise risk management. The study also found a significant encouraging relationship between implementing of this risk management and Tobin's Q both in the short and long run. The implementation of an enterprise risk management system augments the performance of the firm soon after the induction of this system as revealed by the results.
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