How enterprise risk management (erm) can affect on short-term and long-term firm performance: evidence from the Iranian banking system

Arash Khalili Nasr (), Saideh Alaei, Fateme Bakhshi, Farzin Rasoulyan, Hojat Tayaran and Mohammad Farahi
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Arash Khalili Nasr: Sharif University of Technology, Iran
Saideh Alaei: Sharif University of Technology, Iran
Fateme Bakhshi: Sharif University of Technology, Iran
Farzin Rasoulyan: Sharif University of Technology, Iran
Hojat Tayaran: Iran University of Science and Technology, Iran
Mohammad Farahi: University of Isfahan, Iran

Entrepreneurship and Sustainability Issues, 2019, vol. 7, issue 2, 1387-1403

Abstract: Enterprise risk management (ERM) has emerged as a more integrated risk management (IRM) framework in recent years. Many studies have been conducted in recent years to determine the effects of ERM implementation on other parts of an organization. The purpose of this research was to explore the relationship between ERM implementation and organizational performance. The research sample consisted of Iranian banks that either had a license from the central bank of Iran (CBI) or were active in the stock market. A novel measure of ERM implementation was employed in this study. Furthermore, the return on equity (ROE) and Tobin's Q ratio were used as two measures of organizational performance. The results showed that there was a positive and significant relationship between ERM implementation and Tobin's Q ratio, whereas such a significant relationship was not observed between ERM implementation and ROE. The study findings suggested that the adoption of an ERM strategy influences the long-term performance of a firm, not its short-term performance.

Keywords: enterprise risk management; organizational risk management; integrated risk management system; Iranian banking system; firm performance; return on equity; Tobin’s Q ratio (search for similar items in EconPapers)
JEL-codes: D81 G32 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ssi:jouesi:v:7:y:2019:i:2:p:1387-1403

DOI: 10.9770/jesi.2019.7.2(41)

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