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An Analysis of the Impact of Enterprise Risk Management (ERM) on the Firm Performance of Indonesia State-Owned Enterprises

Author

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  • Dinda Amalia CANDELA

    (Universitas Indonesia, Indonesia)

  • Machmudin Eka PRASETYA

    (Universitas Indonesia, Indonesia)

Abstract

This study aims to determine the impact of enterprise risk management (ERM) on company performance in Indonesia’s state-owned enterprises (SOE). This study took a sample of 40 Indonesia SOEs from 2021-2023, with 100 observations. The ERM aspects consist of the Directors of Risk Management, Risk Management Committee, Reporting between Directors to the Risk Management Committee, Risk Assessment, Risk Management Framework, and Risk Management Maturity. At the same time, Company performance is measured by Return on Assets (ROA). Hypothesis testing was carried out using the Ordinary Least Square method, and it showed that the Directors of Risk Management aspect had a significant positive effect on ROA. The Risk Management Committee aspect, reporting between Directors to the Risk Management Committee, Risk Assessment, and Risk Management Framework had no significant effect on ROA. In contrast, the overall implementation of ERM, as measured by RMI, had a significant positive effect on ROA.

Suggested Citation

  • Dinda Amalia CANDELA & Machmudin Eka PRASETYA, 2025. "An Analysis of the Impact of Enterprise Risk Management (ERM) on the Firm Performance of Indonesia State-Owned Enterprises," Management and Economics Review, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 10(2), pages 503-516, June.
    • Handle: RePEc:rom:merase:v:10:y:2025:i:2:p:503-516
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    References listed on IDEAS

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    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation
    • M49 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Other

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