Is enterprise risk management a value added activity?

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Show simple item record Marc, Mojca Sprčić, Danijela Miloš Mešin Žagar, Marina
dc.contributor.other Ekonomická fakulta cs 2018-03-29 2018-03-29 2018-03-29
dc.identifier.issn 1212-3609
dc.description.abstract Enterprise risk management (ERM) programs are advocated as the solution for the failures and weaknesses of the traditional silo-based risk management in creating and protecting stakeholders’ value. ERM encompasses activities and strategies which enable the company to systematically identify, measure, reduce or exploit, as well as to control and monitor the exposure to various types of corporate risks – strategic, financial, operational, reporting as well as compliance risks. By considering the interactive effects of different risk events, ERM offers a balance between the dual nature of risk – ensuring effective protection from threats and seizing the opportunities. This paper explores the association between ERM and a set of fundamental value determinants of S&P 500 non-financial companies over the period from 2003 to 2012. Contrary to arguments found in the existing ERM literature, ERM companies did not experience a positive effect on most of the value drivers. We find that ERM is associated with lower expected growth rates within one to two years after the ERM adoption, indicating that ERM could even have a negative effect on the company’s fundamental value. On the other hand, the study showed that ERM is associated with higher free cash flows after six years of its use. Our research thus found indicative evidence that ERM produces some positive effects over a longer term, as well as some negative immediate effects, which could be explained with the increased risk aversion of ERM companies. However, since the tested models are explorative in nature, more theoretical and empirical research is needed to establish how ERM really works within a company. en
dc.format text
dc.format.extent 17 stran cs
dc.language.iso en
dc.publisher Technická Univerzita v Liberci cs
dc.publisher Technical university of Liberec, Czech Republic en
dc.relation.ispartof Ekonomie a Management cs
dc.relation.ispartof Economics and Management en
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dc.rights CC BY-NC
dc.subject enterprise risk management en
dc.subject value drivers en
dc.subject value creation en
dc.subject non-financial companies en
dc.subject.classification G30
dc.subject.classification G32
dc.title Is enterprise risk management a value added activity? en
dc.type Article en
dc.publisher.abbreviation TUL
dc.relation.isrefereed true
dc.identifier.doi 10.15240/tul/001/2018-1-005
dc.identifier.eissn 2336-5604
local.relation.volume 21
local.relation.issue 1
local.relation.abbreviation E+M cs
local.relation.abbreviation E&M en
local.faculty Faculty of Economics
local.citation.spage 68
local.citation.epage 84
local.access open
local.fulltext yes
local.filename EM_1_2018_05

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