The Influence of Enterprise Risk Management on Financial Performance and Firm Value with The Quality of Environmental, Social and Governance Disclosure (ESG) as a Moderation Variable
Chairani and Dr. Sylvia Veronica Nalurita Purnama Siregar*
University of Indonesia
*Corresponding Author:
Dr. Sylvia Veronica Nalurita Purnama Siregar
Email: sylvia.veronica[at]ui.ac.id
Abstract
This study discusses the importance of Enterprise Risk Management (ERM) on financial performance and firm value with the quality of Environmental, Social, and Governance (ESG) disclosure in sensitive and non-sensitive industries. This study used a sample of 136 industries in ASEAN 5 for five years (2014-2018). The research method used was panel data analysis with 680 observations. The results showed that the ERM is significant positive on financial performance (ROA) and firm value (Tobins Q). In addition, the quality of ESG disclosure is proven to improve the influence of ERM on financial performance and firm value. When viewed from the different industries, the quality of ESG disclosures can improve the influence enterprise risk management on firm value in both sensitive and non-sensitive industries, but conversely on the financial performance only in not sensitive industries. This research can be used as a reference for industries to discuss the concept of Enterprise Risk Management (ERM) and the quality of Environmental, Social, and Governance (ESG) disclosures.
Keywords: Enterprise Risk Management (ERM), Environmental, Social and Governance (ESG), Financial Performance, Firm Value, ASEAN 5
Topic: Economics, Finance, Banking, and Accounting