Nugraha, Deni Pandu and Rizal, Sofyan and Ganika, Gerry (2021) Analyze Enterprise Risk Management Implementation: Empirical Study on Financial Performance and Market Reaction in Indonesia. IOSR Journal of Business and Management, 23 (6). pp. 1-11. ISSN 2278-487X

Text B2306040511.pdf - Published Version Available under License Creative Commons Attribution Share Alike. Download (355kB)

Abstract

Abstract: Background: The importance of corporate risk management makes its application not only in banking companies but also beginning to be applied in other companies. This is an interesting concern for academics to examine the effects of Enterprise Risk Management (ERM) implementation and test whether companies that implement ERM are observing results that are consistent with the benefits originally claimed from ERM. This research looks at financial performance-related impact toward market performance with enterprise risk management (ERM) Implementation as a moderator variable. This research aims that financial performance has positive impacts on market performance. The impact of financial performance toward market performance organization with ERM is higher than organization non-ERM, and financial performance organization with ERM is higher than organization non-ERM. Sample and Methods: Based on published data in Indonesia Stock Exchange (BEI) 2007-2019, The companies that are implementing ERM were consisting of 20 non-bank finance companies and 15 banking companies. This study used event study for market reaction and panel regression for relationship financial performance, ERM toward market performance using stata14. Results: This study bolster the hypothesis. The analyzed outcome demonstrates that statistically, market performance is affected by financial performance accomplishment. Financial performance impacts over the company with ERM have indicated a higher positive connection than company non-ERM toward market performance. Conclusion: Statistical test results represent, the first hypothesis is supported, and the second hypothesis is supported. It can say that the results of the testing revealed that the market reacted to the implementation of ERM, and companies implementing ERM had better market performance and financial performance compared to companies that did not implement ERM. Key Word: ERM, Risk, Financial Performance, Market Performance, Financial Institution.

Actions (login required)

View Item