Enterprise Risk Management Disclosure and Ceo Characteristics: An Empirical Study of Go Public Companies in Indonesia

Abstract

Organizations can use enterprise risk management disclosures to share financial and non-financial risk information with external stakeholders. Chief Executive Officer (CEO) has a key role in enterprise risk management. This study examines the relationship between Indonesian CEOs’ characteristics and enterprise risk management disclosure. Purposive sampling is the basis for the process of gathering samples from the population. The research was conducted in 2020 and consisted of 475 non-financial Indonesian companies that were listed on the Indonesian Stock Exchange. The findings of previously released annual reports may be found on the websites of both the Indonesia Stock Exchange and individual companies. These secondary sources were used to compile the study data. The ISO framework index 31000:2018 is utilized to evaluate the Enterprise risk management (ERM) disclosure. Eviews10’s implementation of multiple regression serves as the basis for the analysis. The findings indicate that CEO overconfidence and CEO tenure influence enterprise risk management disclosure, while CEO financial expertise and CEO gender did not have an effect on enterprise risk management disclosure. The innovation of this research is investigating CEOs’ characteristics by psychological characteristics, namely CEO overconfidence and measurement of ERM disclosure based on the ISO 31000:2018 framework which is the latest standard of risk management.

The Relationship between Respondents’ Characteristics and Their Perceptions of Enterprise Risk Management. Results of a Survey

“…Findings align with those of previous studies that highlighted the importance of ERM and its implementation, given its holistic and integrated view of business risk (Anton e Nucu, 2020;Bromiley et al, 2015;Hernandez-Madrigal et al, 2020). The current study's analysis also demonstrated that respondents identified top management support and organisational climate as ERM implementation determinants, akin to existing literature (Otieno et al, 2019;Trisnawati, Mustikawati & Sasongko, 2023;Yahaya & Yakubu, 2022). Furthermore, most respondents linked ERM implementation to improved business performance; such results are in line with previous studies as well (Annamalah et al, 2018;Fakir & Jusoh, 2020;Fauzi et al, 2022;Florio & Leoni, 2017;Gordon, Loeb & Tseng, 2009;Jonek-Kowalska, 2019;Mahama et al, 2022;Lukianchuk, 2015;Rehman & Anwar, 2019;Muralidhar, 2010;Naseem et al, 2020;Nugraha, Rizal & Ganika, 2022;Perera et al, 2020;Rauf, Jabarand & Mansor, 2020;Yudianto et al, 2021).…”

“…In terms of the relationship between respondents' demographic characteristics and their responses to commonly discussed ERM issues, the results of the present study are consistent with the findings of previous research. ERM issues were highly linked to respondents' educational level and job position; a finding confirmed by previous studies (Belas et al, 2023;Erin, Bamigboye & Arumona, 2020;Lamidi et al, 2022;Maharana et al, 2023;Odubuasi, Ofor & Ilechukwu, 2022;Otieno, Ogutu & Pokhariyal, 2019;Trisnawati, Mustikawati and Sasongko, 2023;Yahaya & Yakubu, 2022;Yang, Ishtiaq & Anwar, 2018).…”

“…Study results indicate that demographics characteristics of the senior management influence the relationship between ERM and performance, underlining the need to not only consider structural and governance-related factors but also the demographic composition of senior management teams. Trisnawati, Mustikawati and Sasongko (2023) analysed the relationship between CEO characteristics and ERM disclosure based on the ISO 31000:2018 framework and found a link between CEO overconfidence and CEO tenure and ERM disclosure, but no link between CEO financial competence and a CEO's gender. Another study demonstrated the moderating effect of top managers' financial education on the relationship between enterprise risk management practices and a firm's competitive advantage; this study illustrated that education is crucial for efficient enterprise risk management practices (Yang, Ishtiaq & Anwar, 2018).…”

Financial Strengthening Strategies in Increasing Company Competitiveness Multinational

“…Multinational companies must ensure that their financial strategies support innovation, investment in research and development (R&D), and market expansion. This is important to maintain a competitive advantage in a highly competitive market (Trisnawati et al, 2023). Thus, a strong financial strategy is not only the basis for a company's financial stability but also a key driver for long-term growth and sustainability.…”