Does Enterprise Risk Management Increase Firm Value?

Submitted on 22nd July 2015

Enterprise risk management (ERM) has emerged as a construct that ostensibly overcomes limitations of silo-based traditional risk management (TRM), yet little is known about its effectiveness. The scant research on the relationship between ERM and firm performance has offered mixed findings and has been limited by the lack of a suitable proxy for the degree of ERM implementation. Using Standard and Poor’s newly available risk management rating, the authors find evidence of a positive relationship between increasing levels of TRM capability and firm value but no additional increase in value for firms achieving a higher ERM rating. Considering these results, the authors suggest directions for future research.

Length of Resource
33 pages
Michael K. McShane, Anil Nair, Elzotbek Rustambekov
Date Published
Publication Type
Resource Type