Enterprise Risk Management and Corporate Performance in Nigerian Non-Financial Quoted Companies

Abstract

The aim of this study is to examine the effect of Enterprise Risk Management (ERM) on
financial performance of the non-financial quoted companies in Nigeria, using the
following financial performance parameters: shareholder value, profit margin ratio, and
management efficiency. Secondary data were obtained from all the thirty-three
companies, which is the total population of all active non-financial companies quoted on
the Nigerian Stock Exchange, and the various compliance elements of ERM practices and
financial performance indicators were identified and examined. Regression analysis was
adopted to examine the effect of ERM on the performance of non-financial quoted firms.
The findings showed that ERM implementation status has positive significant effect on
shareholder value (β = 0.788, p-value < 0.05), profit margin ratio (β = 0.723, p-value <
0.05), and management efficiency (β = 0.817, p-value < 0.05) of non-financial quoted
firms in Nigeria. It is therefore concluded that the implementation status of ERM has a
positive significant effect on shareholder value, profit margin ratio, and management
efficiency of non-financial quoted firms in Nigeria. The study recommends a proactive
risk management approach for non-financial organizations through the adoption of the
ERM programme which is evaluated through the ERM template designed for this study.
Furthermore, it is recommended that non-financial firms should employ ERM towards the
enhancement of their shareholders’ value, profit margin ratio, and management
efficiency.