Enterprise risk management and firm performance: A contingency perspective

Lawrence A. Gordon, Martin P. Loeb and Tseng, Chih-Yang

Journal of Accounting and Public Policy, 2009, vol. 28, issue 4, pages 301-327

Abstract: In recent years, a paradigm shift has occurred regarding the way organizations view risk management. Instead of looking at risk management from a silo-based perspective, the trend is to take a holistic view of risk management. This holistic approach toward managing an organization's risk is commonly referred to as enterprise risk management (ERM). Indeed, there is growing support for the general argument that organizations will improve their performance by employing the ERM concept. The basic argument presented in this paper is that the relation between ERM and firm performance is contingent upon the appropriate match between ERM and the following five factors affecting a firm: environmental uncertainty, industry competition, firm size, firm complexity, and board of directors' monitoring. Based on a sample of 112 US firms that disclose the implementation of their ERM activities within their 10Ks and 10Qs filed with the US Securities and Exchange Commission, empirical evidence confirms the above basic argument. The implication of these findings is that firms should consider the implementation of an ERM system in conjunction with contextual variables surrounding the firm.

Keywords: Enterprise; risk; management; Firm; performance; Contingency; theory; Management; control; systems (search for similar items in EconPapers)
Date: 2009

Downloads: (external link)
http://www.sciencedirect.com/science/article/B6VBG ... ec76d1bfa8c5120e17dc
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:eee:jappol:v:28:y:2009:i:4:p:301-327

Access Statistics for this article

Journal of Accounting and Public Policy is edited by L. A. Gordon

More articles in Journal of Accounting and Public Policy from Elsevier
Series data maintained by Heidi Boesdal ().