Corporate risk management practices and firm value in an emerging market: a mixed methods approach

Abstract

This paper examines the impact of corporate risk management strategies, namely, (1) financial, (2) operational, and (3) enterprise risk management on firm value in the context of an emerging market, Turkey. We use a unique hand-collected sample of non-financial Turkish companies for the years 2010–2015 and use mixed research methods to gain insights into the complex relationship between risk management and firm value. The quantitative methodology is accompanied by a follow up qualitative study that involves in-depth interviews with selected finance and risk management professionals. Results surprisingly reveal that none of the three risk management strategies increase firm value. We explore how the different institutional circumstances surrounding firms moderate the relationship between risk management and firm value and derive some policy implications for authorities in emerging markets regarding improving disclosures on risk management and corporate governance.