Author(s)

Zhenjia Liu ¹

Affiliation(s)

¹ School of Accounting and Finance, Tan Kah Kee College, Xiamen University, Xiamen, Fujian, China

Corresponding Author

Zhenjia Liu

ABSTRACT

Existing studies have indicated that corporate risk management effect of adoption on corporate value. However, applicability of the empirical evidences has not been studied extensively in China listed banks. We examined that the relationship between corporate risk management adoption and corporate value in China listed banks. We adopt the ERM index originated from COSO framework to measure enterprise risk management and economic value added (EVA) to calculate firm performance. We used 37 China listed banks from 2013 to 2021. Regression model was used to test our hypothesis. The empirical results showed that enterprise risk management adoption has non-significantly with economic value added (i.e., corporate performance or value). On the other words, we could not find out their relation.

KEYWORDS

Corporate risk management, corporate value, banks, EVA, China

CITE THIS PAPER

Zhenjia Liu, The Relationship between Corporate Risk Management Adoption and Corporate Value in China Listed Banks. Accounting and Corporate Management (2023) Vol. 5: 35-44. DOI: http://dx.doi.org/10.23977/acccm.2023.050205.

REFERENCES

[1] Fisher, I. N. and Hall, G. R. (1969). Risk and Corporate Rates of Return. The Quarterly Journal of Economics, 79-92.
[2] Bartram, S. M. (2000), Corporate risk management as a lever for shareholder value creation. Financial Markets, Institutions and Instruments 9(5), 279-324.
[3] Fadun, O.S. (2013a). Risk management and risk management failure: lessons for business enterprises. International Journal of Academic Research in Business and Social Sciences, 3(1), 225-239.
[4] Kafidipe, A., Uwalomwa, U.,Dahunsi,O., Okeme,F. O. (2021). Corporate governance, risk management and financial performance of listed deposit money bank in Nigeria. Cogent Business & Management, 8, 1888679.
[5] Pagach, D. and Warr, R. (2011).The Characteristics of Firms that Hire Chief Risk Officers. Journal of risk and insurance, 78(1), 185-211.
[6] Gatzert,N. and Martin, M. (2015). Determinants and Value of Enterprise Risk Management: Empirical evidence from the literature. Risk Management and Insurance Review, 18(1), 29-53.
[7] Ping, T. A. and Muthuveloo, R. (2015). The Impact of Enterprise Risk Management on Firm Performance: Evidence from Malaysia. Asian Social Science, 11(22), 149-159.
[8] Florio, C. and Leoni, G. (2017).Enterprise Risk Management and Firm Performance: The Italian case. The British Accounting Review, 49(1), 56-74.
[9] Malik, M. F., Zaman, M. and& Buckby, S. (2020).Enterprise Risk Management and Firm Performance: Role of the Risk Committee. Journal of Contemporary Accounting & Economics, 16(1), 100178.
[10] Farrell, M. and Gallagher, R. (2015).The Valuation Implications of Enterprise Risk Management Maturity. Journal of Risk and Insurance, 82(3), 625-657.
[11] Khan, M.J., Hussain, D. and Mehmood, W. (2016).Why Do Firms Adopt Enterprise Risk Management (ERM)? Empirical evidence from France. Management Decision, 54(8), 1886-1907.
[12] Callahan, C. and Soileau, J. (2017).Does Enterprise Risk Management Enhance Operating Performance. Advances in Accounting, 37, 122-139.
[13] Agustina,L. and Baroroh,N.(2016). The relationship between Enterprise Risk Management (ERM) and Firm Value Mediated through the Financial Performance. Review of Integrative Business and Economics Research, 5(1), 128-138
[14] Soltanizadeh, S., Rasid, S.Z.A., Golshan, N.M., and Ismail, W.K.W. (2016). Business strategy, enterprise risk management and organizational performance. Management Research Review, 39(9), 1016-1033.
[15] Kakanda, M.M., Salim, B., and Chandren, S. (2017). Corporate governance, risk management disclosure, and firm performance: A theoretical and empirical review perspective. Asian Economic and Financial Review. 7(9), 836-845.
[16] Sprcic, D. M. (2013). Corporate risk management and value creation. Montenegrin Journal of Economics. 9(2), 17-26.
[17] Jamel,L., Albogami,H. E., Abdulaal, M.A., and Aljohani,N. A. (2021). Do agency conflicts between managers and shareholders affect corporate risk management and financial performance of Saudi firms. Journal of Investment Compliance. 22(1), 58-73.
[18] Malik, M., Shafie, R., and Ismail, K.N.I.K. (2021). Do risk management committee characteristics influence the market value of firms. Risk Management, 23, 172-191
[19] Sprčic, D.M., Žagara, M. M., Ševic, Ž., and Marc, M. (2016). Does enterprise risk management influence market value - a long-term perspective. Risk Management, 18(2–3), 65-88.
[20] Lai, F.W. (2017). Economic value added analysis for enterprise risk management. Global Business and Management Research: An International Journal, 9(1), 338-347.
[21] Tahir, I. M., and Razali, A. R. (2011). The relationship between enterprise risk management (ERM) and firm value: Evidence from Malaysian public listed companies. International Journal of Economics and Management Sciences, 1(2), 32-41.
[22] Baxter, R., Bedard, J., Hoitash, R., and Yezegel, A. (2013). Enterprise risk management program quality: Determinants, value relevance, and the financial crisis. Contemporary Accounting Research, 30(4), 1264-1295.
[23] González, L. O., Santomil, P. D. and Herrera, A.T. (2020). The effect of enterprise risk management on the risk and the performance of Spanish listed companies. European Research on Management and Business Economics, 26,111-120.
[24] Danisman, G.O., and Demirel, P. (2019). Corporate risk management practices and firm value in an emerging market: a mixed methods approach. Risk Management, 21, 19-47.
[25] Stewart, G. B. (1991). The Quest for Value, New York.
[26] Gordon, L. A., Loeb, M. P. and Tseng, C. Y. (2009).Enterprise Risk Management and Firm Performance: A Contingency Perspective. Journal of accounting and public policy, 28(4), 301-327.
[27] Eckles, D. L., R. Hoyt, E. and Miller. S. M. (2014). The impact of enterprise risk management on the marginal cost of reducing risk: Evidence from the insurance industry. Journal of Banking & Finance 43,247-261.
[28] McShane, M. K., Nair, A., and Rustambekov, E. (2011). Does enterprise risk management increase firm value. Journal of Accounting, Auditing and Finance, 26(4), 641–658.
[29] Hoyt, R. E., and Liebenberg, A. P. (2011). The value of enterprise risk management. Journal of Risk and Insurance, 78(4), 795-822.
[30] Bohnert, A., Gatzert, N., Hoyt, R. E., and Lechner, P. (2019). The drivers and value of enterprise risk management: Evidence from ERM ratings. The European Journal of Finance, 29(5), 234-255.
[31] Lechner, P., and Gatzert, N. (2018). Determinants and value of enterprise risk management: empirical evidence from Germany. The European Journal of Finance, 24(10), 867–887.
[32] Farrell, M., and Gallagher, R. (2015). The valuation implications of enterprise risk. Journal of Risk and Insurance, 82(3), 625–657.
[33] Ai, J., Bajtelsmit, V. and Wang, T.Y. (2018). The combined effect of enterprise risk management and diversification on property and casualty insurer performance. The Journal of Risk and Insurance. 85(2), 513-543.
[34] Silva, J.R., Da-Silva, A. F. and Chan,B.L.(2019). Enterprise Risk Management and Firm Value: Evidence from Brazil. Emerging Markets Finance & Trade, 55,687-703.
[35] Ali,W., Shakri,I. H. and Javaid, R.(2019). Moderation mediation framework for enterprise risk management and performance of Islamic banks of Pakistan. PAKISTAN BUSINESS REVIEW, 21(3), 85-100.
[36] Šofrankova, B.,Kiselakova, D., and Horvathova J. (2017). Actual questions of risk management in models affecting enterprise performance, Ekonomický časopis, 65(7), 644-667.
[37] Shad,M. K., and Lai, F.W.(2015). A conceptual framework for enterprise risk management performance measure through economic value added. Global Business and Management Research: An International Journal, 7(2), 1-11.
[38] Huang,D.T., and Liu,Z.C.(2010).Board composition and corporate value in high technology firms of Taiwan. International Journal of Organizational Innovation, 2(4), 126-138.
[39] Cohen,L.J., Cornett,M. M., Marcus,A.J. and Tehranian, H.(2014). Bank Earnings Management and Tail Risk during the Financial Crisis. Journal of Money, Credit and Banking, 46(1), 171-197.
[40] Kolsi,M. C. and Grass, R. (2017). Did Corporate Governance Mechanisms Affect Earnings Management? Further Evidence from GCC Islamic Banks. International Journal of Islamic and Middle Eastern Finance and Management 10(1), 2-23.
[41] Moradi, M., Ghomian, M.M. and Fard, M.G. (2012). The relationship between Particular Features of a Firm and the Economic Value Added. World Applied Sciences Journal, 19(11), 1640-1648.
[42] Vijaykumar, A. (2010). Economic Value Added and Market Value Added: An Empirical Study of Relationship. College Sadhana, 2(2), 141-148.
[43] Chen, L. and Qiao. Z. (2008). What Influence the Company’s Economic Value Added? Empirical Evidence from China's Securities Market. Management Science and Engineering, 2(1), 66-76.
[44] Huang, D.T. and Liu, Z.C. (2011). The Relationships among Governance and Earnings Management: An Empirical Study on Non-Profit Hospitals in Taiwan. African Journal of Business Management, 5(14), 5468-5476.

Sponsors, Associates, and Links

---

• Information Systems and Economics
  
  
• Accounting, Auditing and Finance
  
  
• Industrial Engineering and Innovation Management
  
  
• Tourism Management and Technology Economy
  
  
• Journal of Computational and Financial Econometrics
  
  
• Financial Engineering and Risk Management
  
  
• Social Security and Administration Management
  
  
• Population, Resources & Environmental Economics
  
  
• Statistics & Quantitative Economics
  
  
• Agricultural & Forestry Economics and Management
  
  
• Social Medicine and Health Management
  
  
• Land Resource Management
  
  
• Information, Library and Archival Science
  
  
• Journal of Human Resource Development
  
  
• Manufacturing and Service Operations Management
  
  
• Operational Research and Cybernetics