The Effect of the Enterprise Risk Management Implementation on the Firm Value of European Companies

23 Pages Posted: 7 Mar 2013

See all articles by Giorgio Stefano Bertinetti

Giorgio Stefano Bertinetti

Ca Foscari University of Venice - Department of Management

Elisa Cavezzali

Ca Foscari University of Venice - Department of Management

Gloria Gardenal

Ca Foscari University of Venice - Department of Management

Multiple version iconThere are 2 versions of this paper

Date Written: March 1, 2013

Abstract

We aim to investigate the impact of the Enterprise Risk Management (ERM) on the enterprise value and to discover the determinants of this adoption. Several economic actors have decided to face the current economic and financial complexity shifting from a Traditional silo-based Risk Management approach (TRM) to a more comprehensive one: the ERM. Some academics have investigated this topic, focusing mainly on the financial industry, but results are still controversial. In this study we try to understand if the ERM implementation affects firm value on a sample of 200 European companies, both financial and non-financial; second, we test which are the determinants of the ERM adoption. We do this through a FE panel regression analysis and a FE logistic analysis. We find a positive statistically significant relation between the ERM adoption and firm value. As for the probability that a firm engages in an ERM protocol, size, beta and profitability are the statistically significant determinants.

Keywords: traditional risk management, enterprise risk management, industry, firm value

JEL Classification: G32, L22, L25

Suggested Citation

Bertinetti, Giorgio Stefano and Cavezzali, Elisa and Gardenal, Gloria, The Effect of the Enterprise Risk Management Implementation on the Firm Value of European Companies (March 1, 2013). Available at SSRN: https://ssrn.com/abstract=2229271 or http://dx.doi.org/10.2139/ssrn.2229271

Giorgio Stefano Bertinetti

Ca Foscari University of Venice - Department of Management ( email )

San Giobbe, Cannaregio 873
Venice, 30121
Italy

Elisa Cavezzali

Ca Foscari University of Venice - Department of Management ( email )

San Giobbe, Cannaregio 873
Venice, 30121
Italy

Gloria Gardenal (Contact Author)

Ca Foscari University of Venice - Department of Management ( email )

San Giobbe, Cannaregio 873
Venice, 30121
Italy

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