Firm Ownership and Enterprise Risk Management: Evidence from Continental Europe

31 Pages Posted: 22 Apr 2019 Last revised: 19 May 2020

See all articles by Naciye Sekerci

Naciye Sekerci

Utrecht University - School of Economics; Lund University

Donald P. Pagach

North Carolina State University

Date Written: April 4, 2019


Purpose: This paper aims to investigate whether firm ownership can explain the ERM adoption. In particular, we examine the relationships between the presence of large controlling shareholders, multiple blockholders and a dual-class share mechanism, and ERM. ERM best practices are regarded as governance tools used to monitor managerial discretion in risk management, ultimately reducing the agency cost of risk management. Ownership is one of the governance mechanisms that determines the level of monitoring in the firm. Accordingly, we analyze whether ERM is demanded more in certain ownership settings.
Design/methodology/approach: By using a sample of listed Nordic firms, the paper uses tobit and logit models to analyze the relationship between ownership and ERM. Ownership data is hand-collected while ERM data comes from a survey directed to senior executives regarding how their firms organize their risk management programs.
Findings: We find that ERM is favored less in firms i) where there are multiple blockholders, and ii) where large controlling owners hold dual-class shares. Overall, our findings suggest that there is less need for ERM’s monitoring role in firms that are associated with high agency costs.
Originality/value: This study contributes to the literature in the following two ways. First, to our best knowledge, we are the first to provide evidence on the relationship between the presence of multiple blockholders and dual-shares, and ERM. Second, this paper is the first to investigate the relationship between firm ownership and ERM by including all types of owners and all types of listed firms in our sample.
Practical implications: These findings have important implications for firms with multiple blockholders and the growing number of firms that have recently been listed on exchanges with dual-class shares.

Keywords: Multiple blockholders, dual-class shares, large owners, Enterprise Risk Management, Continental Europe, agency cost.

JEL Classification: G32, G34, C31, C58, C83

Suggested Citation

Sekerci, Naciye and Pagach, Donald P., Firm Ownership and Enterprise Risk Management: Evidence from Continental Europe (April 4, 2019). Available at SSRN: or

Naciye Sekerci

Utrecht University - School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, +31 30 253 7373 3584 EC

Lund University ( email )


Donald P. Pagach (Contact Author)

North Carolina State University ( email )

Raleigh, NC 27695-8113
United States
919-515-4447 (Phone)
919-515-4446 (Fax)

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