Enterprise Risk Management and Firm Value: Evidence from Brazil

Abstract

International studies have shown that the evolution of traditional risk management (TRM) toward a holistic perspective and the simple adoption of enterprise risk management (ERM) have increased firm value from a strategic perspective. This study empirically investigates the association between ERM and firm value (measured by Tobin’s q ratio) in 649 firm-year observations that were listed in the IBrX100 index on the Brazilian stock exchange (BM&FBovespa) during 2004–2013. After the introduction of controls with exogenous effects, the results indicate a positive association between firm value and the use of an ERM approach, which aligns with most international studies.