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The effect of enterprise risk management on financial performance and firm value: the role of environmental, social and governance performance

Author

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  • Chairani Chairani
  • Sylvia Veronica Siregar

Abstract

Purpose - This study aims to examine the effect of enterprise risk management (ERM) on financial performance and firm value, as well as the moderating role of environmental, social and governance (ESG) performance. Design/methodology/approach - The samples in this study are listed companies in the ASEAN 5 (Indonesia, Malaysia, Philippines, Singapore and Thailand) during the years 2014–2018, with total observations of 680 firm-years. Fixed effect panel data regressions were used to test the hypotheses. The data was collected from Financial Report, Annual Reports and Thomson Reuters. Findings - The results show that ERM has a positive significant effect on financial performance and firm value. This paper also finds that ESG has a significant moderating role in increasing the effect of ERM on firm value. Further, this paper divides the samples into sensitive and non-sensitive industries and find a significant moderating role of ESG performance on firm performance for sensitive industries. Originality/value - Extant studies have not empirically examined the moderating role of ESG on the effect of ERM on firm performance and firm value. The findings have important implications in suggesting that firms need to analyze various threats and opportunities related to and ESG risks in achieving competitive advantage.

Suggested Citation

  • Chairani Chairani & Sylvia Veronica Siregar, 2021. "The effect of enterprise risk management on financial performance and firm value: the role of environmental, social and governance performance," Meditari Accountancy Research, Emerald Group Publishing Limited, vol. 29(3), pages 647-670, June.
    • Handle: RePEc:eme:medarp:medar-09-2019-0549
    DOI: 10.1108/MEDAR-09-2019-0549
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    Citations

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    Cited by:

    1. Mohamed Rashwan & Nardin Farouk & Rania Pasha, 2025. "Can ESG Strategies Drive Firm Value Growth in the MENA Region?," Sustainability, MDPI, vol. 17(17), pages 1-30, September.
    2. Oluwatoyin Abayomi Amuda & Ayotunde Qudus Saka, 2025. "Robert Gordon University, Department of Accounting and Finance, Aberdeen Business School," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 9(4), pages 4444-4463, April.
    3. Adel Necib & Amira Feidi & Anis Jarboui, 2025. "The Impact of Business Risk, Intellectual Capital, and Institutional Ownership on the Value of the Firm," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(1), pages 3-19.
    4. Ana Lorena Jiménez-Preciado & Miguel Ángel Martínez-García & José Carlos Trejo-García & Francisco Venegas-Martínez, 2025. "Short- and Long-Term Assessments of ESG Risk in Mexican Mortgage Institutions: Combining Expert Surveys, Radar Plot Visualization, and Cluster Analysis," Sustainability, MDPI, vol. 17(12), pages 1-29, June.
    5. Raghad Almashhour & Abroon Qazi & M. K. S. Al-Mhdawi & Abdelkader Daghfous & Bilal M. Ayyub & Alan O’Connor, 2025. "Analyzing Barriers to Sustainable Enterprise Risk Management in the Construction Sector: A Delphi Method and Interpretive Structural Modeling Approach," Sustainability, MDPI, vol. 17(21), pages 1-27, October.
    6. Doaa Hafez Emam Abdellattif & Amina Ramadan Mouhamed Nomer & Dalida Mohamed Adel Eldawayaty, 2025. "Sustainability Risk Management and Financial Distress: The Moderating Role of Financial Performance in Saudi Firms," Sustainability, MDPI, vol. 17(21), pages 1-37, October.
    7. Sakhr Bani-Khaled & Graça Azevedo & Jonas Oliveira, 2025. "Environmental, social, and governance (ESG) factors and firm value: A systematic literature review of theories and empirical evidence," AMS Review, Springer;Academy of Marketing Science, vol. 15(1), pages 228-260, June.
    8. Sérgio Resende & Ariadna Monje‐Amor & Nuria Calvo, 2024. "Enterprise risk management and firm performance: The mediating role of corporate social responsibility in the European Union region," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(4), pages 2852-2864, July.
    9. Wang, Jianling & Ma, Jia & Li, Xiuling & Wang, Chen, 2025. "Nonlinear impact of economic policy uncertainty on corporate ESG performance: Regional, industrial and managerial perspectives," International Review of Financial Analysis, Elsevier, vol. 97(C).
    10. Nghia Nguyen Trinh & Nghia Dang Nguyen, 2025. "Geopolitical Risk and Environmental, Social, and Governance (ESG) practices of listed companies in Vietnam," HO CHI MINH CITY OPEN UNIVERSITY JOURNAL OF SCIENCE - ECONOMICS AND BUSINESS ADMINISTRATION, HO CHI MINH CITY OPEN UNIVERSITY JOURNAL OF SCIENCE, HO CHI MINH CITY OPEN UNIVERSITY, vol. 15(5), pages 150-168.

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