Abstract
Purpose The purpose of this paper is to identify the effect of enterprise risk management (ERM) with firm size, ROA and managerial ownership as control variables on firm value that is proxied by Tobin’s Q. Design/methodology/approach Population of this research was manufacturing companies listed on the Indonesian Stock Exchange (IDX) in 2010–2013. The used method in this research is multiple linear regression-ordinary least square and hypotheses testing using t-test to test the regression coefficients with level of significance of 5 percent. Findings The results showed that ERM, ROA and size of the company have a significant positive effect on the firm value. While the managerial ownership has a significant negative effect on the firm value. Originality/value The results showed that firm value increases as ERM, ROA and size of the company improves. While the managerial ownership has a significant negative effect on the firm value.
Highlights
Companies in running their activities are faced with uncertain conditions that can affect the success or failure in achieving goals
This study was conducted for manufacturing companies listed on the Indonesian Stock Exchange (IDX) in 2010–2013
The subject of this research is the effect of enterprise risk management (ERM) on the firm value in manufacturing companies listed on the IDX for the period 2010–2013
Summary
Companies in running their activities are faced with uncertain conditions that can affect the success or failure in achieving goals. The rapid development of the external and internal environments leads to increasingly complex business risks (Sanjaya and Linawati, 2015). To deal with existing circumstances, companies need to provide management tools that can manage risks (Widjaya and Sugiarti, 2013). A good risk management will improve business certainty and increase competitive advantage and firm value. Risk management is an integral component of corporate strategy and its implementation is done as an action to prevent and mitigate risks to the smallest risk level, in order for the company to survive in competition. Efforts to improve the quality of risk management implementation can be done through integrated risk management, i.e. enterprise risk management (ERM) implementation
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