ENTERPRISE RISK MANAGEMENT AND COMPREHENSIVE PERFORMANCE IN INDONESIA Sigit Kurnianto (a) Bambang Tjahjadi (b*) Iman Harymawan (c)
Universitas Airlangga
Jl. Airlangga 4-6, Surabaya, East Java, Indonesia
*bambang.tjahjadi[at]feb.unair.ac.id
Abstract
This article examines the effects of implementing Enterprise Risk Management (ERM) in improving comprehensive performance performance (sustainability, financial performance, and firm value). This study uses the data from all listed non-financial companies on the Indonesia Stock Exchange and the Global Reporting Initiative database (from 2011 to 2020), and obtains 300 research samples. Employing a least squares regression model for hypothesis testing and employing various robustness analysis to validate the findings, the study demonstrates a positive association between ERM and sustainability, financial performance, and firm value. Additional analysis shows that ERM affects sustainability and firm value for all industries, both in high and low growth industries.The robustness of these relationships is confirmed through sensitivity tests, fixed effects panel data, coarsened exact matching method, and two-stage Heckman regression. While the study primarily focuses on one country^s firms, it offers valuable insights for corporate leaders and policy makers, advocating for ERM as a tool to advance sustainable development by identifying social risks, mitigating adverse impacts, and enhancing social benefits while minimizing negative effects on short-term and long-term corporate goals. Thus, this research underscores the critical link between ERM and comprehensive performance within the context of sustainable development Social implications. ERM can help identify social risks, help take action to reduce adverse impacts and increase social benefits, so as to minimize negative impacts that affect the company^s short-term and long-term goals. This study addresses the link between ERM and comprehensive performance.
