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Enterprise risk management and firm performance: Empirical evidence from Ghana equity market

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  • Sylvester Senyo Horvey
  • Jacob Ankamah
  • David McMillan

Abstract

This paper examines the linear and non-linear relationship between Enterprise Risk Management (ERM) and firm performance while focusing on how operational status (financial and non-financial listed firms’ status) affects this relationship in Ghana. Analysis of 30 listed firms on Ghana Stock Exchange between 2010 and 2016 in a robust fixed effect and random effect estimation techniques, presented new insights into ERM literature. We showed that ERM propels firm performance at both the firm level (return on assets and equity) and market level (Tobin Q) performance of listed firms in Ghana. A non-linear inverted U-shape is observed when return on equity is employed as a performance indicator while a non-linear direct U-shape is observed when return on assets and Tobin Q are employed as performance indicators. A non-linear relationship exists between ERM and performance of listed firms in Ghana whether the non-linearity is an inverted U shape or direct U shape depends on the firm performance. This paper recommends that firms should implement fundamental robust measures and dynamic risk management techniques to get better ERM outcome. Enterprise Risk Management should be implemented in both financial firms and non-financial firms because firms which practice ERM are more likely to perform better than Non-ERM counterparts.

Suggested Citation

  • Sylvester Senyo Horvey & Jacob Ankamah & David McMillan, 2020. "Enterprise risk management and firm performance: Empirical evidence from Ghana equity market," Cogent Economics & Finance, Taylor & Francis Journals, vol. 8(1), pages 1840102-184, January.
    • Handle: RePEc:taf:oaefxx:v:8:y:2020:i:1:p:1840102
    DOI: 10.1080/23322039.2020.1840102
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    Cited by:

    1. Sylvester Senyo Horvey & Jones Odei-Mensah, 2024. "Enterprise risk management and performance of the South African insurers: the moderating role of corporate governance," Risk Management, Palgrave Macmillan, vol. 26(4), pages 1-28, December.
    2. Feng, Xiaocui & Yu, Ruiqing, 2025. "How does digital transformation affect corporate risk-taking? Evidence from China," International Review of Economics & Finance, Elsevier, vol. 97(C).
    3. Sylvester Senyo Horvey & Jones Odei-Mensah, 2025. "Re-examining the microeconomic and macroeconomic determinants of nonlife insurers profitability in South Africa: insights from linear and threshold analysis," Journal of Innovation and Entrepreneurship, Springer, vol. 14(1), pages 1-29, December.
    4. Wafa Mohammad Abdaljabar & Norhayati Zakuan & Muhamad Zameri Mat Saman & Mariam Setapa, 2025. "The Effect of Enterprise Risk Management Implementation on Non-Financial Performance in Jordan Manufacturing Firms: A Review," Information Management and Business Review, AMH International, vol. 17(1), pages 148-157.

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