The Determinant of Enterprise Risk Management Implementation: Evidence in Thailand and Malaysia
Keywords:Enterprise Risk Management, ERM Implementation, Driver of ERM, Determinant, Firm Specification
The implementation of Enterprise Risk Management (ERM) has been seen as a plausible solution to difficulties that arose during the recent global financial crisis. In an increasingly volatile global financial environment, ERM is considered to have a clear advantage over Traditional Risk Management (TRM). While many companies have setup ERM initiatives; they lack a clear understanding on the factors that will lead to successful ERM implementation. There are relatively few studies conducted in this area and especially in developing countries like Thailand and Malaysia. This paper therefore aims to gain insight into the influential factors of ERM implementation in both Thai and Malaysian listed companies. This study is based on surveys of managing directors from public listed firms in the Stock Exchange of Thailand and Malaysia. Based on the data obtained, regression models will be employed to determine the relationship between derived scores and the attributes of the organizations. The empirical results show that different countries have different determinants of ERM. Firm size has a statistically positive relationship with a high level of ERM implementation in both countries. In Thai listed companies, economic factors have a statistically positive relationship with the high level of ERM implementation and lower ERM scores have more revenue volatility than those with well-implement ERM. While, big 4 audit firms associated with the degree of ERM implementation in Malaysian listed companies.
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