| Abstract: |
We aim to investigate the impact of the adoption of an Enterprise Risk
Management (ERM) system on the enterprise value and to discover which are the
determinants of this choice. Several economic actors have decided to face the
current economic and financial complexity shifting from a Traditional
silo-based Risk Management approach (TRM) to a more comprehensive one, the so
called Enterprise Risk Management (ERM). Some academics have tried to
investigate the effects of the ERM implementation on firm value, mainly
focusing on the financial industry. The results are still controversial.
Moreover, there is no empirical evidence about the adoption of ERM programs
among non-financial companies. The aim of our study is double: first, we try
to understand if the ERM implementation affects firm value on a sample of 200
European companies, belonging to both financial and non-financial industries;
second, we test which are the determinants of the adoption of an ERM system.
We do this performing a fixed effects panel regression analysis (goal 1) and a
fixed effects logistic analysis (goal 2). We find a positive statistically
significant relation between the ERM adoption and firm value. As for the
probability that a firm engages in an ERM protocol, we find that size, the
company beta and profitability (ROA) are the statistically significant
determinants. |