Enterprise risk-based management disclosures and firm value of Indonesian finance companies

  • Received March 31, 2020;
    Accepted December 3, 2020;
    Published December 21, 2020
  • Author(s)
  • DOI
  • Article Info
    Volume 18 2020, Issue #4, pp. 414-422
  • Cited by
    4 articles

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This work is licensed under a Creative Commons Attribution 4.0 International License

Rapid changes in business transactions and technology development have made risk-based management a significant issue for business entities. The ability in managing risk would lead to a better firm value. This study investigates the effect of enterprise risk-based management disclosures (ERMD) and intellectual capital (IC) on firm value. It also tests the moderating effect of profitability on the relationship ERMD and IC with firm value. It examines the annual reports of 49 finance firms listed on the Indonesia Stock Exchange (IDX). The data cover three years, from 2016 to 2018. It employs panel data regression to test the hypotheses. The results show that the effect of ERMD and IC on firm value is partially and positively moderated by profitability. The findings show that the application of ERDM and IC can increase firm value. The originality of this study is that profitability can moderate the effect of ERMD and IC on firm value. The increase of ERMD and IC management within the company must be balanced with profitability to raise capital from outside the company to increase firm value.

The Research was conducted with the support of the Universitas Riau, Indonesia.

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    • Table 1. Descriptive statistics of variables (n = 147 firm years)
    • Table 2. Chow test results
    • Table 3. Hausman test results
    • Table 4. Lagrange multiplier test results
    • Table 5. Random effect model
    • Table 6. Panel data regression analysis with moderation
    • Conceptualization
      Enni Savitri
    • Data curation
      Enni Savitri, Tatang Ary Gumanti, Nelly Yulinda
    • Formal Analysis
      Enni Savitri, Tatang Ary Gumanti, Nelly Yulinda
    • Funding acquisition
      Enni Savitri, Nelly Yulinda
    • Methodology
      Enni Savitri, Nelly Yulinda
    • Investigation
      Enni Savitri
    • Project administration
      Enni Savitri
    • Supervision
      Enni Savitri, Nelly Yulinda
    • Visualization
      Enni Savitri
    • Writing – original draft
      Enni Savitri, Tatang Ary Gumanti
    • Writing – review & editing
      Enni Savitri, Tatang Ary Gumanti
    • Resources
      Tatang Ary Gumanti
    • Validation
      Tatang Ary Gumanti
    • Software
      Nelly Yulinda