IDEAS home Printed from https://ideas.repec.org/a/bcp/journl/v8y2024i6p3073-3090.html

Does Enterprise Risk Management Improve Performance and Create Shareholder Value? Empirical Evidence of Listed Firms on the Ho Chi Minh Stock Exchange, Vietnam

Author

Listed:
  • Phan Thi Anh Nguyet

    (School of Economics, Can Tho University, Can Tho, Vietnam)

  • Nguyen Phuoc Bao An

    (School of Economics, Can Tho University, Can Tho, Vietnam)

  • Nguyen Thi Thu Hien

    (School of Economics, Can Tho University, Can Tho, Vietnam)

Abstract

This study applies Agency Theory, Stakeholder theory, and Modern Portfolio Theory, which revolves around the way enterprises are organized, managed, and controlled and guides the managers’ decisions in ensuring stability and creating value based on satisfying the interests of stakeholders, to analyze the impact of enterprise risk management implementation on the firm’s performance and value creation of 285 listed firms on the Ho Chi Minh Stock Exchange, Vietnam, from 2017 to 2022. Feasible Generalized Least Squares (FGLS) estimation results show that risk management practices positively affect firm value and business performance. In addition, the study also indicates that the variables of Big 4 auditor, inspection committee presence, sales growth, firm age, firm size, and leverage have affected firm performance and value differently. The findings have several implications for investors, managers, and researchers.

Suggested Citation

  • Phan Thi Anh Nguyet & Nguyen Phuoc Bao An & Nguyen Thi Thu Hien, 2024. "Does Enterprise Risk Management Improve Performance and Create Shareholder Value? Empirical Evidence of Listed Firms on the Ho Chi Minh Stock Exchange, Vietnam," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(6), pages 3073-3090, June.
    • Handle: RePEc:bcp:journl:v:8:y:2024:i:6:p:3073-3090
    as

    Download full text from publisher

    File URL: https://www.rsisinternational.org/journals/ijriss/Digital-Library/volume-8-issue-6/3073-3090.pdf
    Download Restriction: no
    File URL: https://rsisinternational.org/journals/ijriss/articles/does-enterprise-risk-management-improve-performance-and-create-shareholder-value-empirical-evidence-of-listed-firms-on-the-ho-chi-minh-stock-exchange-vietnam/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Lim, Sonya Seongyeon & Wang, Heli, 2007. "The effect of financial hedging on the incentives for corporate diversification: The role of stakeholder firm-specific investments," Journal of Economic Behavior & Organization, Elsevier, vol. 62(4), pages 640-656, April.
    2. Short, Helen & Keasey, Kevin, 1999. "Managerial ownership and the performance of firms: Evidence from the UK," Journal of Corporate Finance, Elsevier, vol. 5(1), pages 79-101, March.
    3. Lang, Larry & Ofek, Eli & Stulz, Rene M., 1996. "Leverage, investment, and firm growth," Journal of Financial Economics, Elsevier, vol. 40(1), pages 3-29, January.
    4. Nazliatul Aniza Abdul Aziz & Norlida Abdul Manab & Siti Norezam Othman, 2015. "Exploring the Perspectives of Corporate Governance and Theories on Sustainability Risk Management (SRM)," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 5(10), pages 1148-1158.
    5. Faisal Faisal & Zainal Abidin & Haryanto Haryanto & Yudhvir Seetharam, 2021. "Enterprise risk management (ERM) and firm value: The mediating role of investment decisions," Cogent Economics & Finance, Taylor & Francis Journals, vol. 9(1), pages 2009090-200, January.
    6. Joseph Albasu & Jerome Nyameh, 2017. "Relevance of Stakeholders Theory, Organizational Identity Theory and Social Exchange Theory to Corporate Social Responsibility and Employees Performance in the Commercial Banks in Nigeria," International Journal of Business, Economics and Management, Conscientia Beam, vol. 4(5), pages 95-105.
    7. Agarwal, Rajshree & Gort, Michael, 1996. "The Evolution of Markets and Entry, Exit and Survival of Firms," The Review of Economics and Statistics, MIT Press, vol. 78(3), pages 489-498, August.
    8. Joseph Albasu & Jerome Nyameh, 2017. "Relevance of Stakeholders Theory, Organizational Identity Theory and Social Exchange Theory to Corporate Social Responsibility and Employees Performance in the Commercial Banks in Nigeria," International Journal of Business, Economics and Management, Conscientia Beam, vol. 4(5), pages 95-105.
    9. Elton, Edwin J. & Gruber, Martin J., 1997. "Modern portfolio theory, 1950 to date," Journal of Banking & Finance, Elsevier, vol. 21(11-12), pages 1743-1759, December.
    10. Edwin J. Elton & Martin J. Gruber, 1997. "Modern Portfolio Theory, 1950 to Date," New York University, Leonard N. Stern School Finance Department Working Paper Seires 97-3, New York University, Leonard N. Stern School of Business-.
    11. Maury, Benjamin, 2006. "Family ownership and firm performance: Empirical evidence from Western European corporations," Journal of Corporate Finance, Elsevier, vol. 12(2), pages 321-341, January.
    12. Nazliatul Aniza Abdul Aziz & Norlida Abdul Manab & Siti Norezam Othman, 2015. "Exploring the Perspectives of Corporate Governance and Theories on Sustainability Risk Management (SRM)," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 5(10), pages 1148-1158, October.
    13. Donald Pagach & Richard Warr, 2011. "The Characteristics of Firms That Hire Chief Risk Officers," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 78(1), pages 185-211, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mazurina Mohd Ali & Nur Shazwani Ab Hamid & Erlane K Ghani, 2019. "Examining the Relationship Between Enterprise Risk Management and Firm Performance in Malaysia," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 10(3), pages 239-251, May.
    2. Neha Chhabra Roy, 2024. "Sustainable lending strategies: a framework for enhancing climate resilience in industrial loan portfolios," Asia Europe Journal, Springer, vol. 22(4), pages 423-462, December.
    3. Henriques, Irene & Sadorsky, Perry, 2018. "Investor implications of divesting from fossil fuels," Global Finance Journal, Elsevier, vol. 38(C), pages 30-44.
    4. Mulherin, J. Harold & Netter, Jeffry M. & Poulsen, Annette B., 2018. "Observations on research and publishing from nineteen years as editors of the Journal of Corporate Finance," Journal of Corporate Finance, Elsevier, vol. 49(C), pages 120-124.
    5. Ngo, Vu Minh & Nguyen, Huan Huu & Van Nguyen, Phuc, 2023. "Does reinforcement learning outperform deep learning and traditional portfolio optimization models in frontier and developed financial markets?," Research in International Business and Finance, Elsevier, vol. 65(C).
    6. Pohl, Erik & Geldermann, Jutta, 2024. "Selection of multi-criteria energy efficiency and emission abatement portfolios in container terminals," European Journal of Operational Research, Elsevier, vol. 316(1), pages 386-395.
    7. Neaime, Simon, 2016. "Financial crises and contagion vulnerability of MENA stock markets," Emerging Markets Review, Elsevier, vol. 27(C), pages 14-35.
    8. Adam Karp & Gary Van Vuuren, 2019. "Investment Implications Of The Fractal Market Hypothesis," Annals of Financial Economics (AFE), World Scientific Publishing Co. Pte. Ltd., vol. 14(01), pages 1-27, March.
    9. Forouli, Aikaterini & Doukas, Haris & Nikas, Alexandros & Sampedro, Jon & Van de Ven, Dirk-Jan, 2019. "Identifying optimal technological portfolios for European power generation towards climate change mitigation: A robust portfolio analysis approach," Utilities Policy, Elsevier, vol. 57(C), pages 33-42.
    10. Al Janabi, Mazin A.M., 2014. "Optimal and investable portfolios: An empirical analysis with scenario optimization algorithms under crisis market prospects," Economic Modelling, Elsevier, vol. 40(C), pages 369-381.
    11. Joanna Janczura & Andrzej Puć, 2023. "ARX-GARCH Probabilistic Price Forecasts for Diversification of Trade in Electricity Markets—Variance Stabilizing Transformation and Financial Risk-Minimizing Portfolio Allocation," Energies, MDPI, vol. 16(2), pages 1-28, January.
    12. Samuel Tabot Enow, 2022. "Overreaction And Underreaction During The Covid-19 Pandemic In The South African Stock Market And Its Implications," Eurasian Journal of Business and Management, Eurasian Publications, vol. 10(1), pages 19-26.
    13. Pattitoni, Pierpaolo & Savioli, Marco, 2011. "Investment choices: Indivisible non-marketable assets and suboptimal solutions," Economic Modelling, Elsevier, vol. 28(6), pages 2387-2394.
    14. de Oliveira, Francisco Alexandre & de Paiva, Anderson Paulo & Lima, José Wanderley Marangon & Balestrassi, Pedro Paulo & Mendes, Ronã Rinston Amaury, 2011. "Portfolio optimization using Mixture Design of Experiments: Scheduling trades within electricity markets," Energy Economics, Elsevier, vol. 33(1), pages 24-32, January.
    15. Esra Memili & Kaustav Misra, 2015. "Corporate Governance Provisions, Family Involvement, and Firm Performance in Publicly Traded Family Firms," IJFS, MDPI, vol. 3(3), pages 1-36, July.
    16. Hamadi, Malika & Heinen, Andréas, 2015. "Firm performance when ownership is very concentrated: Evidence from a semiparametric panel," Journal of Empirical Finance, Elsevier, vol. 34(C), pages 172-194.
    17. Olivier Boiral & David Talbot & Marie‐Christine Brotherton, 2020. "Measuring sustainability risks: A rational myth?," Business Strategy and the Environment, Wiley Blackwell, vol. 29(6), pages 2557-2571, September.
    18. Jing Shao & Asif Mahmood & Heesup Han, 2021. "Unleashing the Potential Role of CSR and Altruistic Values to Foster Pro-Environmental Behavior by Hotel Employees," IJERPH, MDPI, vol. 18(24), pages 1-16, December.
    19. BRATIAN Vasile, 2017. "Portfolio Optimization - Application Of Sharpe Model Using Lagrange," Revista Economica, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 69(5), pages 8-21, December.
    20. Marcello Spanò, 2007. "Managerial Ownership and Corporate Hedging," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 34(7‐8), pages 1245-1280, September.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bcp:journl:v:8:y:2024:i:6:p:3073-3090. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr. Pawan Verma (email available below). General contact details of provider: https://rsisinternational.org/journals/ijriss/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.