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The Determinants of Enterprise Risk Management (ERM) Practices in Malaysian Public Listed Companies

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  • Ahmad Rizal Razali
  • Izah Mohd Tahir

Abstract

The objective of this study is to examine the determinants of Enterprise Risk Management (ERM) adoption in Malaysian Public Listed Companies (PLCs). The study focuses on ten industries from five hundred and seventy four Public Listed Companies in Malaysia for the period 2007. These ten industries include industrial products, trading/services, consumer products, properties, constructions, plantations, infrastructure projects, technology, hotels and mining. Logit regression approach will be employed, and a dummy variable equals one if companies adopt ERM and zero otherwise, is used as the dependent variable. Seven independent variables used are Size, Leverage, Profitability, International Diversification, Ownership, Chief Risk Officer and Turnover. The main results of this research is that companies with high turnover, hiring Chief Risk Officer and companies that are not diversified internationally are more likely to adopt ERM. Interestingly, Size, Leverage, Profitability, and Ownership are not significant determinants of ERM practices.

Suggested Citation

  • Ahmad Rizal Razali & Izah Mohd Tahir, 2011. "The Determinants of Enterprise Risk Management (ERM) Practices in Malaysian Public Listed Companies," Journal of Social and Development Sciences, AMH International, vol. 1(5), pages 202-207.
    • Handle: RePEc:rnd:arjsds:v:1:y:2011:i:5:p:202-207
    DOI: 10.22610/jsds.v1i5.645
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    References listed on IDEAS

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    1. André P. Liebenberg & Robert E. Hoyt, 2003. "The Determinants of Enterprise Risk Management: Evidence From the Appointment of Chief Risk Officers," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 6(1), pages 37-52, February.
    2. Anne E. Kleffner & Ryan B. Lee & Bill McGannon, 2003. "The Effect of Corporate Governance on the Use of Enterprise Risk Management: Evidence From Canada," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 6(1), pages 53-73, February.
    3. Beasley, Mark S. & Clune, Richard & Hermanson, Dana R., 2005. "Enterprise risk management: An empirical analysis of factors associated with the extent of implementation," Journal of Accounting and Public Policy, Elsevier, vol. 24(6), pages 521-531.
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    Cited by:

    1. Stanley Chege & Gregory Wanyembi & Constantine Nyamboga, 2023. "Enterprise Risk Management Practices in Kenya," Journal of International Business Research and Marketing, Inovatus Services Ltd., vol. 8(1), pages 15-26, April.
    2. Erastus Karanja & Mark A. Rosso, 2017. "The Chief Risk Officer: a study of roles and responsibilities," Risk Management, Palgrave Macmillan, vol. 19(2), pages 103-130, May.
    3. Levente Bakos & Dănuț Dumitru Dumitrașcu, 2021. "Decentralized Enterprise Risk Management Issues under Rapidly Changing Environments," Risks, MDPI, vol. 9(9), pages 1-19, September.
    4. Rami Shaheen & Mehmet Ağa & Husam Rjoub & Ahmad Abualrub, 2020. "Investigation of the Pillars of Sustainability Risk Management as an Extension of Enterprise Risk Management on Palestinian Insurance Firms’ Profitability," Sustainability, MDPI, vol. 12(11), pages 1-20, June.

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