Does enterprise risk management influence market value – A long-term perspective

Danijela Miloš Sprčić (), Marina Mešin Žagar (), Željko Šević () and Mojca Marc ()
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Danijela Miloš Sprčić: Faculty of Economics and Business, University of Zagreb
Marina Mešin Žagar: Faculty of Economics and Business, University of Zagreb
Željko Šević: Faculty of Business, Sohar University
Mojca Marc: Faculty of Economics, University of Ljubljana

Risk Management, 2016, vol. 18, issue 2, No 1, 65-88

Abstract: Abstract This article explores if and how Enterprise Risk Management (ERM) influences market values of large US non-financial companies in the period from 2003 to 2012. This is the first empirical study that brings evidence on the effect of ERM on the value of non-financial companies and that explores not only the market reaction to the ERM announcement, but also the investors’ perception of long-term ERM usage. Our research shows evidence that ERM has a positive effect on the market value for a short period of time following the announcement of ERM implementation. After 2.67 years, the market premium for ERM companies fades away, so a company does not have a higher market value just because it has ERM. Our results indicate that ERM does not contribute to a company’s market value in the long term.

Keywords: enterprise risk management; market value; non-financial companies; US market (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (2)

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DOI: 10.1057/rm.2016.3

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