The Influence of Advanced Enterprise Risk Management Implementation Analyses : The Role Of Environmental, Social and Governance Performances
DOI:
https://doi.org/10.52728/ijjm.v4i3.830Keywords:
Advanced Enterprise Risk Management (ERMADV) Implementation, Company Performance, Company Value, ESG, Manufacture Industry, Mining IndustryAbstract
The objective of this study is to investigate to which extend does Enterprise Risk Management Advanced (ERMADV) implementation impacts the firm performance and the moderated value by ESG performance. The assessment of ERMADV implementation level is conducted by using eight components derived from governance and firm operating activities with related measurements on Organization for Economic Cooperation and Development (OECD) principle and COSO ERM-Integrated Framework. Board Gender Diversity, Board of Commissioner Size, Firm Size, Leverage and Return on Equity (ROE) were further included in this study as control variables. This study focuses on the manufacture and mining industry registered on the Indonesia Stock Exchange website from year 2015 to 2021. The findings of this research indicate that ERMADV significantly affects firm performance and value. In addition, it is discovered that ESG plays a moderating influence. Furthermore, ESG suggests that an advanced ERM framework will prioritize risks associated with ESG-related aspects to find out whether or not it is resilient and integrated. As a result, this strategy will direct organizations in developing ethical decision-making strategies, thus, improving financial performance and firm value.
Downloads
References
Agustina, L., & Baroroh, N. (2016). The relationship between Enterprise Risk Management (ERM) and firm value mediated through the financial performance. Review of Integrative Business and Economics Research, 5(1), 128–138.
Aziz, N. A. A., Manab, N. A., & Othman, S. N. (2016). Sustainability Risk Management (SRM): An Extension of Enterprise Risk Management (ERM) Concept. International Journal of Management and Sustainability, 5(1), 1–10. https://doi.org/10.18488/journal.11/2016.5.1/11.1.1.10
Bahrudin, M. (2016). Desain Implementasi ISO 31000 Sebagai Panduan Manajemen Risiko Di Unit Dokumentasi Dan Data Standarisasi Pusido BSN. Conference: Seminar Dan Knowledge Sharing Kepustakawanan Forum Perpusdokinfo LPNK Ristek, June 2016.
Barney (1991).pdf. (n.d.).
Baxter, R., Bedard, J. C., Hoitash, R., & Yezegel, A. (2013). Enterprise risk management program quality: Determinants, value relevance, and the financial crisis. Contemporary Accounting Research, 30(4), 1264–1295. https://doi.org/10.1111/j.1911-3846.2012.01194.x
Beasley, M., Pagach, D., & Warr, R. (2008). Information conveyed in hiring announcements of senior executives overseeing enterprise-wide risk management processes. Journal of Accounting, Auditing and Finance, 23(3), 311–332. https://doi.org/10.1177/0148558X0802300303
Bouslah, K., Kryzanowski, L., & M’Zali, B. (2013). The impact of the dimensions of social performance on firm risk. Journal of Banking and Finance, 37(4), 1258–1273. https://doi.org/10.1016/j.jbankfin.2012.12.004
Brigham, E. F., Houston, J. F., & Eugene, F. (2009). Fundamentals of financial management, concise Edition. Cengage Learning.
Buallay, A. (2019). Is sustainability reporting (ESG) associated with performance? Evidence from the European banking sector. Management of Environmental Quality: An International Journal, 30(1), 98–115. https://doi.org/10.1108/MEQ-12-2017-0149
Callahan, C., & Soileau, J. (2017). Does Enterprise risk management enhance operating performance? Advances in Accounting, 37, 122–139. https://doi.org/10.1016/j.adiac.2017.01.001
Cecilia, Rambe, S., & Torong, M. Z. B. (2015). Analisis pengaruh corporate social responsibility , Profitabilitas dan ukuran perusahaan terhadap nilai perusahaan yang go public di Indonesia, Malaysia, dan Singapura. Jurnal Akuntansi, Hal 1-22.
COSO. (2004). COSO ERM framework released. Internal Auditor, 61(5), 17–19.
COSO and WBCSD. (2018). Enterprise risk management: Applying enterprise risk management to environmental, social and governance-related risks. Enterprise Risk Management: Applying Enterprise Risk Management to Environmental, Social and Governance-Related Risks, 300–317. https://www.coso.org/Documents/COSO-WBCSD-ESGERM-Guidance-Full.pdf
Devi, S., Budiasih, I. G. N., & Badera, I. D. N. (2017). Pengaruh Pengungkapan Enterprise Risk Management Dan Pengungkapan Intellectual Capital Terhadap Nilai Perusahaan. Jurnal Akuntansi Dan Keuangan Indonesia, 14(1), 20–45. https://doi.org/10.21002/jaki.2017.02
Dunn, J., Fitzgibbons, S., & Pomorski, L. (2017). Assessing Risk Through Environmental, Social and Governance Exposures. Www.Joim.Com Journal Of Investment Management, 16(1), 4–17. www.joim.com
Florio, C., & Leoni, G. (2017). Enterprise risk management and firm performance: The Italian case. British Accounting Review, 49(1), 56–74. https://doi.org/10.1016/j.bar.2016.08.003
Fraj, E., Martínez, E., & Matute, J. (2011). Green marketing strategy and the firm’s performance: The moderating role of environmental culture. Journal of Strategic Marketing, 19(4), 339–355. https://doi.org/10.1080/0965254X.2011.581382
Godfrey, P. (2010). The Effect of Firm Compensation Structures on the Mobility and Entrepreneurship of Extreme Performers. Business, 920(October), 1–43. https://doi.org/10.1002/smj
Gordon, L. A., Loeb, M. P., & Tseng, C. Y. (2009). Enterprise risk management and firm performance: A contingency perspective. Journal of Accounting and Public Policy, 28(4), 301–327. https://doi.org/10.1016/j.jaccpubpol.2009.06.006
Hoyt, R. E., & Liebenberg, A. P. (2011). The Value of Enterprise Risk Management. Journal of Risk and Insurance, 78(4), 795–822. https://doi.org/10.1111/j.1539-6975.2011.01413.x
Khan, S. N., & Ali, E. I. E. (2017). The Moderating Role of Intellectual Capital Between Enterprise Risk Management and Firm Performance: A Conceptual Review. American Journal of Social Sciences and Humanities, 2(1), 9–15. https://doi.org/10.20448/801.21.9.15
Lechner, P., & Gatzert, N. (2018). Determinants and value of enterprise risk management: empirical evidence from Germany. European Journal of Finance, 24(10), 867–887. https://doi.org/10.1080/1351847X.2017.1347100
Meulbroek, L. K. (2002). a Senior Manager’S Guide To Integrated Risk Management. Journal of Applied Corporate Finance, 14(4), 56–70. https://doi.org/10.1111/j.1745-6622.2002.tb00449.x
Pagach, D., & Warr, R. (2010). Incentives for Financial Risk Management in Vietnamese Enterprises: A Study on TheirDeterminants. Journal of Economics Development, 22(2), 85–101. https://doi.org/10.24311/jed/2015.22.2.02
Parfitt, C. (2020). ESG integration treats ethics as risk, but whose ethics and whose risk? Responsible investment in the context of precarity and risk-shifting. Critical Sociology, 46(4–5), 573–587.
Parmar, B. L., Freeman, R. E., Harrison, J. S., Wicks, A. C., Purnell, L., Bidhan, L., Edward, R., Jeffrey, S., & Andrew, C. (2011). The Academy of Management Annals Stakeholder Theory : The State of the Art Stakeholder Theory : The State of the Art. Management, 936836193, 403–445.
Pérez-Cornejo, C., de Quevedo-Puente, E., & Delgado-García, J. B. (2019). How to manage corporate reputation? The effect of enterprise risk management systems and audit committees on corporate reputation. European Management Journal, 37(4), 505–515. https://doi.org/10.1016/j.emj.2019.01.005
Shad, M. K., Lai, F. W., Fatt, C. L., Klemeš, J. J., & Bokhari, A. (2019). Integrating sustainability reporting into enterprise risk management and its relationship with business performance: A conceptual framework. Journal of Cleaner Production, 208, 415–425. https://doi.org/10.1016/j.jclepro.2018.10.120
Vinet, L., & Zhedanov, A. (2011). A ‘missing’family of classical orthogonal polynomials. Journal of Physics A: Mathematical and Theoretical, 44(8), 85201.
World Business Council for Sustainable Development (WBCSD). (2017). Sustainability and enterprise risk management: The first step towards integration. 1–52. https://www.integratedreporting.org/resource/wbcsd-sustainability-and-enterprise-risk-management-the-first-step-towards-integration/
Downloads
Published
How to Cite
Issue
Section
License
This work is licensed under a Creative Commons Attribution 4.0 International License.
