Does Enterprise risk management enhance operating performance?

Callahan, Carolyn M.; Soileau, Jared S.

doi:10.1016/j.adiac.2017.01.001

Cited by 133 publications

(115 citation statements)

References 19 publications

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“…This is consistent with Florio and Leoni (2017), who examined those SMEs who succeed in the markets which have formal policies and ERM practices. Therefore, in the competitive environment, SMEs need to focus on risk reduction approaches to gain superior performance (Callahan and Soileau 2017;Florio and Leoni 2017). Our results strongly support Zou and Hassan (2017) who argued that in emerging economies, the performance of SMEs is significantly positively related to ERM practices.…”

Section: Discussionsupporting

confidence: 80%

“…Hence, managers are strongly encouraged and advised to work in the implementation of ERM practices to improve the firm values and performance (Lajili 2009;Liu et al 2017). It is doubtless that there is a significant positive association between ERM practices and firm performance (Callahan and Soileau 2017;Florio and Leoni 2017;Zou and Hassan 2017). Therefore, the first hypothesis is proposed:…”

Section: Erm and Firm Performancementioning

confidence: 99%

“…It increases a firm's profitability by reducing different operational and marginal costs as well as reduce the uncertainty of stock market returns (Eckles et al 2014). A firm that has a formal implementation of ERM practices can enjoy the high operational performance and earns over those who have lack of ERM practices (Callahan and Soileau 2017). Hence, managers are strongly encouraged and advised to work in the implementation of ERM practices to improve the firm values and performance (Lajili 2009;Liu et al 2017).…”

Section: Erm and Firm Performancementioning

confidence: 99%

“…In response to unexpected threats, one school of thought believed in the direct impact of ERM on firm performance (Callahan and Soileau 2017;Florio and Leoni 2017;Zou and Hassan 2017) while another group of researchers claimed that the relationship of ERM and firm performance could be affected by some internal factors (Khan and Ali 2017;Wang et al 2010). Much research has discussed the importance of ERM practices among businesses (Eckles et al 2014;Florio and Leoni 2017;Yilmaz and Flouris 2017).…”

Section: Introductionmentioning

confidence: 99%

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Enterprise Risk Management Practices and Firm Performance, the Mediating Role of Competitive Advantage and the Moderating Role of Financial Literacy

Yang

Ishtiaq

Anwar

2018

JRFM

167

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In the current turbulent market, firms spend lots of tangible and intangible resources to gain competitive advantage and superior performance. Prior studies have discussed several determinants of competitive advantage and performance, particularly in developed economies, whereas small-and medium-sized enterprises (SMEs) in emerging economies have received minor attention. This study examines the mediating role of competitive advantage between enterprise risk management practices and SME performance and the moderating role of financial literacy between enterprise risk management practices and competitive advantage. A structured questionnaire is used to collect data from 304 SMEs operating in the emerging market of Pakistan. The hypotheses of the proposed study are tested through Structural Equation Modeling (SEM) in Analysis of a Moment Structures (AMOS). The results indicate that enterprise risk management practices significantly influence competitive advantage and SME performance. Competitive advantage partially mediates the relationship between enterprise risk management practices and SME performance. Additionally, financial literacy significantly moderates the relationship between enterprise risk management practices and competitive advantage. Firms are advised to implement formal enterprise risk management practices to gain competitive advantage and superior performance. Top managers need to have enough financial education that they will be able to perform risk management practices in an efficient way to gain a competitive position in the market. Implications for practices have been discussed in detail.

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Section: Discussionsupporting

confidence: 80%

Section: Erm and Firm Performancementioning

confidence: 99%

Section: Erm and Firm Performancementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Enterprise Risk Management Practices and Firm Performance, the Mediating Role of Competitive Advantage and the Moderating Role of Financial Literacy

Yang

Ishtiaq

Anwar

2018

JRFM

167

View full text Add to dashboard Cite

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“…A second opinion also stated that the board lacks the capacity and time to supervise and fully implement risk policies across the entire organizational setup through management to the rank and file. Callahan and Soileau (2017), therefore, discredited the role of the board, citing that the members are external parties to the organization and secondly, the number of times board meeting are scheduled to deliberate on issues bothering on the future of the organization is not sufficiently adequate to perform a thorough assessment such as internal control and risk management issues which demand a holistic approach. Considering the above issues and judgment from separate opinions, it is therefore recommended that management and policy makers take decisions in view of the five explanatory factors and base the reforms on total variance rather than selectively approaching risk by isolating the variables.…”

Section: Discussionmentioning

confidence: 99%

The Value of Public Sector Risk Management: An Empirical Assessment of Ghana

Kong

Lartey

Bah

et al. 2018

Administrative Sciences

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This study investigates risk management practices in public entities in the Ghana. We relied on the popular framework designed by the Committee of Sponsoring Organizations of the Treadway Commission-COSO, to advocate for possible ways to minimize the occurrence and effects of risk in public organizations. The internal control elements used include: control environment, commitment to ethics, segregation of duties, review and information and communication. These constitute the explanatory variables used in performing multivariate data analysis to determine the dimensionality of the data set and possible outcomes. The exploratory research followed a quantitative approach using the survey method and a structured equation model. We established that, due to globalization and increases in the scale of operations, it is practically impossible for management through the help of auditors and those in charge of governance to validate the entire operations of the public sector to ensure strict compliance to internal control principles, in order to minimize the detrimental impacts of risk. However, an alternative sustainability depends on the prominence of quality financial reporting, compliance, commitment to ethical values and consistency in pursuit of the strategic and operational objectives based on good corporate governance. On the other hand, the implications of risks should be embedded in the minds of public servants as part of the organizational culture that will complement existing tools and techniques of internal control.

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Corporate social responsibility engagement and firm performance in Asia Pacific: The role of enterprise risk management

Naseem

Shahzad

Asim

et al. 2019

Corp Soc Responsibility Env

120

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We examine a channel through which corporate social responsibly affects firm performance. More specifically, we modeled the mediating role of enterprise risk management between corporate social responsibility and firm performance. We use the weighted average of environmental, social, and governance scores (as a proxy of corporate social responsibility) extracted from DataStream of Thomson Reuters‐ASSET4. Drawing on the stakeholder theory and using a large sample of 1021 Asia Pacific firms throughout 2006–2016, we show that corporate social responsibly is positively associated with firm performance. Our results suggest that corporate social responsibly is linked to enterprise risk management. However, the effect of corporate social responsibly on firm performance is both direct and indirect. We provide evidence that enterprise risk management partially mediates the relationship between corporate social responsibility and firm performance. We account for the issue of endogeneity and use alternative measures of firm performance for a robustness check. The findings offer important implications of socially responsible business processes through leveraging on the significance of enterprise risk management.

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Does Enterprise risk management enhance operating performance?

Cited by 133 publications

References 19 publications

Enterprise Risk Management Practices and Firm Performance, the Mediating Role of Competitive Advantage and the Moderating Role of Financial Literacy

Enterprise Risk Management Practices and Firm Performance, the Mediating Role of Competitive Advantage and the Moderating Role of Financial Literacy

The Value of Public Sector Risk Management: An Empirical Assessment of Ghana

Corporate social responsibility engagement and firm performance in Asia Pacific: The role of enterprise risk management

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