Study On The Impact Of Enterprise Risk Management Level To Firm Value

Since twenty-first Century, the economic globalization, regional integration and the long-term development of transnational enterprise, which all make the types and forms of risks, faced by the enterprise, become more and more diverse and complex. Two questions concerning “how to deal with the internal and external risks faced by the enterprise”, and “how to avoid all kinds of risk happening again”, have become an important issue to governments, financial regulators and the man of insight among the whole world. Therefore, it puts forward higher requirements on the scope and execution mode of enterprise risk management.At present, Enterprise Risk Management(ERM) has been widely accepted and recognized in the world. It is of great significance for reducing the influence of risks suffered by the enterprise in the market environment at home and abroad, and realizing the sustainable development of enterprises. However, a unitary standard has not yet been formed in the academic community about the issue “how to build a quantitative index of ERM”. From other studies and the actual operation status of the enterprise, the paper has collected the data of the ERM index from six targets which are strategic objective, business objective, compliance objective, reporting objective, finance objective, and the objective of corporate social responsibility. On this basis, the author construct ERM indexes with multiple objective dimension to measure the level of enterprise risk management in the article, meanwhile, it discusses the impact of indexes on enterprise value in different regression model. The empirical results have proved that:(1)There is no obvious linear correlation between ERM indexes based on social responsibility objective and others. Moreover, compared with others, it also contains more information and better explanatory ability. The article has detailed the rationality and validity of introducing the social responsibility goal in constructing ERM index, particularly from the theoretical and empirical point.(2)ERM index has an remarkable impact on the enterprise value, and in multiple objective dimensions, the relationship of them is nonlinear. Meanwhile, with the different objective dimensions, ERM indexes will be different. And this will lead directly to a doubt that the influence on enterprise value is positive or negative,which must be cleared by taking the specific target dimensions and the actual situation in to account. So it's offered a possible explanation to the reason why many conclusions about the impact of ERM index on enterprise value are different in previous studies.(3)The establishment of a chief risk officer(CRO) specializing in risk management in financial enterprise can manage the risk faced by the enterprises effectively. Namely, it can actively avoid the loss of potential risks and choose those risks which can bring benefits. All it means that it would do great help to improve the anti-risk ability of enterprises significantly, and also promote the enterprise value effectively.The study results maybe can guide and encourage enterprises to avoid the loss of potential risks actively, choose the risk that can bring benefits effectively. And it would provide certain reference value in improving the anti-risk ability of enterprises, the company's market performance significantly, and enhancing enterprise value effectively.