Firm Performance and Value Effects of Enterprise Risk Management
John Kommunuri, Auckland University of Technology
Anil Narayan, Auckland University of Technology
Mark Wheaton, RMIT University, Vietnam
Lilibeth Jandug, RMIT University, Vietnam
Satya Gonuguntla, Manukau Institute of Technology
Abstract: Enterprise risk management (ERM) has emerged as a new model for managing a complex portfolio of risks. This study draws attention to the performance and value effects of ERM adoption in emerging economies using the case of Vietnam. Vietnam has experienced rapid economic growth through massive privatisation and inflow of Foreign Direct Investments (FDIs). Like other emerging and transition economies, Vietnam is yet to strengthen its institutional capacity to support its economic expansion. Firms are reluctant to adopt ERM because of the difficulty in quantifying the value of ERM adoption. Within this context, this study investigates the benefits of ERM for firms in improving their performance and value. The results show empirical evidence for the perceived benefits of effective ERM adoption in Vietnam. However, for some firms, this has become a costly exercise and so exhibits a negative impact on their performance.