The effect of Enterprise Risk Management on the risk and the performance of Spanish listed companies

  1. Luís Otero González 1
  2. Pablo Durán Santomil 1
  3. Aracely Tamayo Herrera 1
  1. 1 Universidade de Santiago de Compostela
    info

    Universidade de Santiago de Compostela

    Santiago de Compostela, España

    ROR https://ror.org/030eybx10

Revista:
European Research on Management and Business Economics

ISSN: 2444-8834

Ano de publicación: 2020

Volume: 26

Número: 3

Páxinas: 111-120

Tipo: Artigo

DOI: 10.1016/J.IEDEEN.2020.08.002 DIALNET GOOGLE SCHOLAR lock_openAcceso aberto editor

Outras publicacións en: European Research on Management and Business Economics

Obxectivos de Desenvolvemento Sustentable

Resumo

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.

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Información de financiamento

Ministry of Science,Innovation and Universities (MCIU) of Spain, the Spanish State Research Agency (AEI) and European Regional Development Fund (RTI2018-100702-B-I00 MCIU/AEI/FEDER, UE).

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