Determinants and value of enterprise risk management: empirical evidence from Germany |
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Authors: | Philipp Lechner |
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Affiliation: | Department of Insurance Economics and Risk Management, Friedrich-Alexander University Erlangen-Nürnberg (FAU), Lange Gasse 20, Nürnberg D-90403, Germany |
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Abstract: | Enterprise risk management (ERM) has become increasingly relevant in recent years, especially due to an increasing complexity of risks and the further development of regulatory frameworks. The aim of this paper is to empirically analyze firm characteristics that determine the implementation of an ERM system and to study the impact of ERM on firm value. We focus on companies listed at the German stock exchange, which to the best of our knowledge is the first empirical study with a cross-sectional analysis for Germany and one of the first for a European country. Our findings show that size, international diversification and the industry sector (banking, insurance, energy) positively impact the implementation of an ERM system, and financial leverage is negatively related to ERM engagement. In addition, our results confirm a significant positive impact of ERM on shareholder value. |
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Keywords: | Enterprise risk management firm characteristics shareholder value |
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