The Enterprise Risk Managemet (ERM) emerged about 25 years ago, being highlighted as the maximum evolution of risk management, integrating it transversely across the organization, which rapidly sparked the literature interest in the factors that explain the adoption of this approach. In the last decade, the number of studies that focus on the impact of ERM adoption in value creation has been increasing, nevertheless still few studies have focused on the level of ERM implementation. With the aim to investigate the determinants and impact of ERM implementation maturity in value creation, an innovative measure was created, in which a qualitative score from 1 to 5 is attributed to a set of elements, that afterwards is aggregated in 4 categories - Governance, Strategy, Analysis and Control – and in an overall score. The results suggest that ERM implementation maturity is positively related to companies with more growth opportunities and with higher size, are associated with companies with lower profitability and financial slack, therefore more financially restricted, and with less opacity. Regarding the impact of ERM implementation maturity in the value creation, the results suggest that companies with higher maturity have a higher Tobin’s Q, by contrast the market does not seem to react to the improvement of ERM implementation maturity. Together these results might suggest that the value creation benefits of the ERM benefits may only manifest in the long run. Furthermore, it was found that companies with higher score in Strategy and Analysis have a higher Tobin’s Q, whereas the development of Governance destroys value.
Date of Award | 7 Jul 2021 |
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Original language | Portuguese |
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Awarding Institution | - Universidade Católica Portuguesa
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Supervisor | Ricardo Cunha (Supervisor) |
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- Enterprise risk management
- ERM maturity
- Qualitative scoring
A maturidade de implementação de enterprise risk management: um estudo sobre os seus determinantes e criação de valor
Vieira, D. F. C. (Student). 7 Jul 2021
Student thesis: Master's Thesis