The effect of Enterprise Risk Management on the risk and the performance of Spanish listed companies
This paper evaluates the effect of Enterprise Risk Management (ERM) on the performance and the financial stability of a sample of non-financial Spanish listed companies. The information about ERM is taken from the annual reports, management reports and annual corporate governance reports disseminate...
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2020-09-01
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Online Access: | http://www.sciencedirect.com/science/article/pii/S2444883420303028 |
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doaj-082254797ee2410091d7c8a7e88537e42020-11-25T03:06:09ZspaElsevierEuropean Research on Management and Business Economics2444-88342020-09-01263111120The effect of Enterprise Risk Management on the risk and the performance of Spanish listed companiesLuís Otero González0Pablo Durán Santomil1Aracely Tamayo Herrera2University of Santiago de Compostela, SpainCorresponding author at: Facultad de Económicas y Empresariales, Departamento de Economía Financiera y Contabilidad, Avda. do Burgo s/n, 15782, Santiago de Compostela, Spain.; University of Santiago de Compostela, SpainUniversity of Santiago de Compostela, SpainThis paper evaluates the effect of Enterprise Risk Management (ERM) on the performance and the financial stability of a sample of non-financial Spanish listed companies. The information about ERM is taken from the annual reports, management reports and annual corporate governance reports disseminated over four years (2012−2015). The data on performance and financial stability have been obtained through the SABI (Iberian Balance Sheet Analysis System) and Morningstar Direct. The results obtained show that the adoption of ERM is not associated with a change in the performance of Spanish companies (measured through the return on equity, return on assets and Tobin’s Q) nor does it reduce the probability of bankruptcy. Having a chief risk officer (CRO) can actually reduce performance, although it can improve the degree of financial health measured as the distance to default. Regarding the relationship between the hedging of risks on the profitability and the level of risk, we find evidence of improvement through the hedging of exchange risk.http://www.sciencedirect.com/science/article/pii/S2444883420303028ERMEnterprise Risk ManagementRiskPerformance |
collection |
DOAJ |
language |
Spanish |
format |
Article |
sources |
DOAJ |
author |
Luís Otero González Pablo Durán Santomil Aracely Tamayo Herrera |
spellingShingle |
Luís Otero González Pablo Durán Santomil Aracely Tamayo Herrera The effect of Enterprise Risk Management on the risk and the performance of Spanish listed companies European Research on Management and Business Economics ERM Enterprise Risk Management Risk Performance |
author_facet |
Luís Otero González Pablo Durán Santomil Aracely Tamayo Herrera |
author_sort |
Luís Otero González |
title |
The effect of Enterprise Risk Management on the risk and the performance of Spanish listed companies |
title_short |
The effect of Enterprise Risk Management on the risk and the performance of Spanish listed companies |
title_full |
The effect of Enterprise Risk Management on the risk and the performance of Spanish listed companies |
title_fullStr |
The effect of Enterprise Risk Management on the risk and the performance of Spanish listed companies |
title_full_unstemmed |
The effect of Enterprise Risk Management on the risk and the performance of Spanish listed companies |
title_sort |
effect of enterprise risk management on the risk and the performance of spanish listed companies |
publisher |
Elsevier |
series |
European Research on Management and Business Economics |
issn |
2444-8834 |
publishDate |
2020-09-01 |
description |
This paper evaluates the effect of Enterprise Risk Management (ERM) on the performance and the financial stability of a sample of non-financial Spanish listed companies. The information about ERM is taken from the annual reports, management reports and annual corporate governance reports disseminated over four years (2012−2015). The data on performance and financial stability have been obtained through the SABI (Iberian Balance Sheet Analysis System) and Morningstar Direct. The results obtained show that the adoption of ERM is not associated with a change in the performance of Spanish companies (measured through the return on equity, return on assets and Tobin’s Q) nor does it reduce the probability of bankruptcy. Having a chief risk officer (CRO) can actually reduce performance, although it can improve the degree of financial health measured as the distance to default. Regarding the relationship between the hedging of risks on the profitability and the level of risk, we find evidence of improvement through the hedging of exchange risk. |
topic |
ERM Enterprise Risk Management Risk Performance |
url |
http://www.sciencedirect.com/science/article/pii/S2444883420303028 |
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