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How enterprise risk management (erm) can affect on short-term and long-term firm performance: evidence from the Iranian banking system

Author

Listed:
  • Arash Khalili Nasr

    (Sharif University of Technology, Iran)

  • Saideh Alaei

    (Sharif University of Technology, Iran)

  • Fateme Bakhshi

    (Sharif University of Technology, Iran)

  • Farzin Rasoulyan

    (Sharif University of Technology, Iran)

  • Hojat Tayaran

    (Iran University of Science and Technology, Iran)

  • Mohammad Farahi

    (University of Isfahan, Iran)

Abstract

Enterprise risk management (ERM) has emerged as a more integrated risk management (IRM) framework in recent years. Many studies have been conducted in recent years to determine the effects of ERM implementation on other parts of an organization. The purpose of this research was to explore the relationship between ERM implementation and organizational performance. The research sample consisted of Iranian banks that either had a license from the central bank of Iran (CBI) or were active in the stock market. A novel measure of ERM implementation was employed in this study. Furthermore, the return on equity (ROE) and Tobin's Q ratio were used as two measures of organizational performance. The results showed that there was a positive and significant relationship between ERM implementation and Tobin's Q ratio, whereas such a significant relationship was not observed between ERM implementation and ROE. The study findings suggested that the adoption of an ERM strategy influences the long-term performance of a firm, not its short-term performance.

Suggested Citation

  • Arash Khalili Nasr & Saideh Alaei & Fateme Bakhshi & Farzin Rasoulyan & Hojat Tayaran & Mohammad Farahi, 2019. "How enterprise risk management (erm) can affect on short-term and long-term firm performance: evidence from the Iranian banking system," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 7(2), pages 1387-1403, December.
    • Handle: RePEc:ssi:jouesi:v:7:y:2019:i:2:p:1387-1403
    DOI: 10.9770/jesi.2019.7.2(41)
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    References listed on IDEAS

    as
    1. Jing Ai & Vickie Bajtelsmit & Tianyang Wang, 2018. "The Combined Effect of Enterprise Risk Management and Diversification on Property and Casualty Insurer Performance," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 85(2), pages 513-543, June.
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    Cited by:

    1. Sorin Gabriel Anton & Anca Elena Afloarei Nucu, 2020. "Enterprise Risk Management: A Literature Review and Agenda for Future Research," JRFM, MDPI, vol. 13(11), pages 1-22, November.
    2. Yousra R. Obiedallah & Asmaa H. Abdelaziz, 2024. "Financial inclusion and Financial Performance: The interplay role of capital adequacy requirements in Egyptian Banks," Future Business Journal, Springer, vol. 10(1), pages 1-13, December.

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    More about this item

    Keywords

    enterprise risk management; organizational risk management; integrated risk management system; Iranian banking system; firm performance; return on equity; Tobin’s Q ratio;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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