Enterprise Risk Management; Panel Data Regression; Financial Institutions
Abstract
This research aims to investigate how the performance of top 10 companies in FTSE Bursa Malaysia KLCI from year 2003-2023 is associated with implementation of enterprise risk management (ERM). Analysis is based on two separate periods, defined as pre- and post 2013’s Bursa Malaysia Guidelines to test relationship between the adoption of ERM and firm performance. Results of the study revealed that there exists a strong and positive relationship between profitability, environmental uncertainty, ERM as well as company performance. In contrast, firm size and leverage were negatively and statistically significantly related to company performance. Furthermore, diagnostic tests (such as the Hausman and Chow test) are employed to check the robustness of the results. Results reveal that since 2013, the mean and standard deviation of the ERM variable increases. This result serves as an eye-opener for Malaysian financial institution organisations on whether or not ERM is important and provides potential benefits, considering Bursa Malaysia Guidelines being enacted in 2013. They also affect the future of the regulatory reform and stakeholders.