Determinants of Enterprise Risk Management Adoption: An Empirical Analysis of Malaysian Public Listed Firms
Purpose:This paper aims to gain insights to the influential factors of ERM adoptions by public listed firms in Malaysia. Findings:The two factors of financial leverage and auditor type were found to be significant influential factors for ERM adoption. In other words the findings indicated that firms with higher financial leverage and with a Big Four auditor are more likely to have a form of ERM framework in place. Originality/Value:Since there are relatively few studies conducted in this area and specially in developing economies like Malaysia, this study will broaden the scope of literature by providing novel empirical evidence.
[1] Bainbridge, S. 2009. Caremark and Enterprise Risk Management.
UCLA School of Law, Law-Econ Research Paper No. 09-08.
[2] Beasley, M., Clune, R. &Hermanson, D. 2005. Enterprise risk
management: An empirical analysis of factors associated with the extent
of implementation. Journal of Accounting and Public Policy, 24, 521-
531.
[3] Beasley, M., Pagach, D. &Warr, R. 2008. Information conveyed in
hiring announcements of senior executives overseeing enterprise-wide
risk management processes. JOURNAL OF ACCOUNTING
AUDITING AND FINANCE, 23, 311.
[4] Chapman, C. 2003. Bringing ERM into focus. Internal Auditor, 60, 30-
36.
[5] Chase-Jenkins, L., Farr, I. &Lebens, J. 2010. Risk Appetite: The
Foundation of Enterprise Risk Management. In: WATSON, T. (ed.)
Thought Leadership Series. Towers Watson.
[6] CIA-Theworldfactbook. 2010. Company Comparison- real growth rate
[Online]. [Accessed 15 Oct 2011].
[7] Cohen, J. 1988. Statistical power analysis for the behavioral sciences,
Lawrence Erlbaum.
[8] Colquitt, L. L., Hoyt, R. E. & Lee, R. B. 1999. Integrated risk
management and the role of the risk manager. Risk Management and
Insurance Review, 2, 43-61.
[9] Coso, Committee of Sponsoring Organizations of the Treadway
Commission. 2004. Enterprise Risk Management- Integrated
Framework.
[10] Daud, W. N. W. D., Yazid, A. S. & Hussin, H. M. R. 2010. The Effect
Of Chief Risk Officer (CRO) On Enterprise Risk Management (ERM)
Practices: Evidence From Malaysia. International Business &
Economics Research Journal (IBER), 9.
[11] Doyle, J., Ge, W. &Mcvay, S. 2007. Determinants of weaknesses in
internal control over financial reporting. Journal of Accounting and
Economics, 44, 193-223.
[12] Fabozzi, F. J. & Peterson, P. P. 2003. Financial management and
analysis, John Wiley & Sons Inc.
[13] Fong-Woon Lai, F. a. S. 2010. ERM Framework and the Empirical
Determinants of its Implementation.
[14] Frantz, M. How much cash is at risk? Evidence from US non-financial
firms. 2011.
[15] Gordon, L. A., Loeb, M. P. & Tseng, C. Y. 2009. Enterprise risk
management and firm performance: A contingency perspective. Journal
of Accounting and Public Policy, 28, 301-327.
[16] Hollingsworth, L. 2006. Implementing an enterprise risk management
framework lowers capital costs improves budget performance. Florida
Water Resources Journal, 22-24.
[17] Hoyt, R. E. & Liebenberg, A. P. 2010. The value of enterprise risk
management. Journal of Risk and Insurance.
[18] KucukYilmaz, A. 2009. Airport Enterprise Risk Management. 1.
[19] Liebenberg, A. P. & Hoyt, R. E. 2003. The determinants of enterprise
risk management: evidence from the appointment of chief risk officers.
Risk Management and Insurance Review, 6, 37-52.
[20] Pagach, D. &Warr, R. 2011. The characteristics of firms that hire chief
risk officers. Journal of Risk and Insurance.
[21] Pricewaterhousecoopers 2004. Managing Risk: An Assessment of CEO
Perspectives. New York: PwC.
[22] Puan, Y. 2009. Audit committee characteristics and risk management of
Malaysian listed firms. Malaysian Accounting Review, 8, 19-36.
[23] Razali, A. R., Yazid, A. S. &Tahir, I. M. 2011. The determinants of
enterprise risk management (ERM) practices in Malaysian public listed
companies. Journal of Social and Development Sciences, 1, 202-207.
[24] Rochette, M. 2009. From risk management to ERM. Journal of Risk
Management in Financial Institutions, 2, 394-408.
[25] Stokes, M. 2004. Taking full advantage of enterprise-wide risk
management. The Treasurer.
[26] Talley, E. L. 2006. Cataclysmic Liability Risk Among Big Four
Auditors. Colum. L. Rev., 106, 1641.
[27] Tax Management Inc., A. B. C. 2011. Coordinating Risk Management
and Performance Measurement. In: THE BUREAU OF NATIONAL
AFFAIRS, I. (ed.) Accounting Policy & Practice Series
[28] Woon, L. F., Azizan, N. A. &Samad, M. F. A. 2011. A Strategic
Framework For Value Enhancing Enterprise Risk Management. Journal
of Global Business and Economics, 2, 23-48.
[1] Bainbridge, S. 2009. Caremark and Enterprise Risk Management.
UCLA School of Law, Law-Econ Research Paper No. 09-08.
[2] Beasley, M., Clune, R. &Hermanson, D. 2005. Enterprise risk
management: An empirical analysis of factors associated with the extent
of implementation. Journal of Accounting and Public Policy, 24, 521-
531.
[3] Beasley, M., Pagach, D. &Warr, R. 2008. Information conveyed in
hiring announcements of senior executives overseeing enterprise-wide
risk management processes. JOURNAL OF ACCOUNTING
AUDITING AND FINANCE, 23, 311.
[4] Chapman, C. 2003. Bringing ERM into focus. Internal Auditor, 60, 30-
36.
[5] Chase-Jenkins, L., Farr, I. &Lebens, J. 2010. Risk Appetite: The
Foundation of Enterprise Risk Management. In: WATSON, T. (ed.)
Thought Leadership Series. Towers Watson.
[6] CIA-Theworldfactbook. 2010. Company Comparison- real growth rate
[Online]. [Accessed 15 Oct 2011].
[7] Cohen, J. 1988. Statistical power analysis for the behavioral sciences,
Lawrence Erlbaum.
[8] Colquitt, L. L., Hoyt, R. E. & Lee, R. B. 1999. Integrated risk
management and the role of the risk manager. Risk Management and
Insurance Review, 2, 43-61.
[9] Coso, Committee of Sponsoring Organizations of the Treadway
Commission. 2004. Enterprise Risk Management- Integrated
Framework.
[10] Daud, W. N. W. D., Yazid, A. S. & Hussin, H. M. R. 2010. The Effect
Of Chief Risk Officer (CRO) On Enterprise Risk Management (ERM)
Practices: Evidence From Malaysia. International Business &
Economics Research Journal (IBER), 9.
[11] Doyle, J., Ge, W. &Mcvay, S. 2007. Determinants of weaknesses in
internal control over financial reporting. Journal of Accounting and
Economics, 44, 193-223.
[12] Fabozzi, F. J. & Peterson, P. P. 2003. Financial management and
analysis, John Wiley & Sons Inc.
[13] Fong-Woon Lai, F. a. S. 2010. ERM Framework and the Empirical
Determinants of its Implementation.
[14] Frantz, M. How much cash is at risk? Evidence from US non-financial
firms. 2011.
[15] Gordon, L. A., Loeb, M. P. & Tseng, C. Y. 2009. Enterprise risk
management and firm performance: A contingency perspective. Journal
of Accounting and Public Policy, 28, 301-327.
[16] Hollingsworth, L. 2006. Implementing an enterprise risk management
framework lowers capital costs improves budget performance. Florida
Water Resources Journal, 22-24.
[17] Hoyt, R. E. & Liebenberg, A. P. 2010. The value of enterprise risk
management. Journal of Risk and Insurance.
[18] KucukYilmaz, A. 2009. Airport Enterprise Risk Management. 1.
[19] Liebenberg, A. P. & Hoyt, R. E. 2003. The determinants of enterprise
risk management: evidence from the appointment of chief risk officers.
Risk Management and Insurance Review, 6, 37-52.
[20] Pagach, D. &Warr, R. 2011. The characteristics of firms that hire chief
risk officers. Journal of Risk and Insurance.
[21] Pricewaterhousecoopers 2004. Managing Risk: An Assessment of CEO
Perspectives. New York: PwC.
[22] Puan, Y. 2009. Audit committee characteristics and risk management of
Malaysian listed firms. Malaysian Accounting Review, 8, 19-36.
[23] Razali, A. R., Yazid, A. S. &Tahir, I. M. 2011. The determinants of
enterprise risk management (ERM) practices in Malaysian public listed
companies. Journal of Social and Development Sciences, 1, 202-207.
[24] Rochette, M. 2009. From risk management to ERM. Journal of Risk
Management in Financial Institutions, 2, 394-408.
[25] Stokes, M. 2004. Taking full advantage of enterprise-wide risk
management. The Treasurer.
[26] Talley, E. L. 2006. Cataclysmic Liability Risk Among Big Four
Auditors. Colum. L. Rev., 106, 1641.
[27] Tax Management Inc., A. B. C. 2011. Coordinating Risk Management
and Performance Measurement. In: THE BUREAU OF NATIONAL
AFFAIRS, I. (ed.) Accounting Policy & Practice Series
[28] Woon, L. F., Azizan, N. A. &Samad, M. F. A. 2011. A Strategic
Framework For Value Enhancing Enterprise Risk Management. Journal
of Global Business and Economics, 2, 23-48.
@article{"International Journal of Business, Human and Social Sciences:61730", author = "Nargess Mottaghi Golshan and Siti Zaleha Abdul Rasid", title = "Determinants of Enterprise Risk Management Adoption: An Empirical Analysis of Malaysian Public Listed Firms", abstract = "Purpose:This paper aims to gain insights to the influential factors of ERM adoptions by public listed firms in Malaysia. Findings:The two factors of financial leverage and auditor type were found to be significant influential factors for ERM adoption. In other words the findings indicated that firms with higher financial leverage and with a Big Four auditor are more likely to have a form of ERM framework in place. Originality/Value:Since there are relatively few studies conducted in this area and specially in developing economies like Malaysia, this study will broaden the scope of literature by providing novel empirical evidence.
", keywords = "Enterprise risk management, risk, public listed company.", volume = "6", number = "2", pages = "256-8", }
