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<p>This study empirically <i>tests</i> the Eisenegger and Imhof reputation risk theory to provide new insights into a robust conceptualization and measurement of corporate reputation risk (<i>CRRisk</i>) as well as its relationship with firm value <i>(FV</i>). We further <i>investigate</i> whether enterprise risk management quality (<i>ERMQ</i>) matters for the CRRisk-FV nexus. Using panel data of listed non-financial firms from sub-Saharan Africa from 2014 to 2020, analyzed using the least square dummy variable (LSDV) estimator, we provide empirical evidence that <i>CRRisk</i> diminishes <i>FV</i>. Also, we find considerable evidence that <i>ERMQ</i> attenuates <i>CRRisk</i> towards <i>FV</i>. We also provide evidence that high-quality ERM is contingent on firm size, profitability, environmental uncertainty, and corporate risk-taking. Our findings are robust to channel and regional analyses, dimensions of <i>CRRisk</i>, and endogeneity using the GMM estimator. Our findings remind shareholders and regulators to intensify pressure on firms to increase their investment in high-quality ERM systems to signal a commitment to sound risk governance, curbing managerial opportunism, and monitoring decisions detrimental to firms' reputations and value.</p>

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Enterprise risk management quality and firm value: Evidence from corporate reputation risk theory

  • 期刊论文

  • 发表日期：

    2025年1月3日

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  • Sulaiman Ademola Oreshile,
  • Nurul Shahnaz Mahdzan,
  • Rozaimah Zainudin

摘要

This study empirically tests the Eisenegger and Imhof reputation risk theory to provide new insights into a robust conceptualization and measurement of corporate reputation risk (CRRisk) as well as its relationship with firm value (FV). We further investigate whether enterprise risk management quality (ERMQ) matters for the CRRisk-FV nexus. Using panel data of listed non-financial firms from sub-Saharan Africa from 2014 to 2020, analyzed using the least square dummy variable (LSDV) estimator, we provide empirical evidence that CRRisk diminishes FV. Also, we find considerable evidence that ERMQ attenuates CRRisk towards FV. We also provide evidence that high-quality ERM is contingent on firm size, profitability, environmental uncertainty, and corporate risk-taking. Our findings are robust to channel and regional analyses, dimensions of CRRisk, and endogeneity using the GMM estimator. Our findings remind shareholders and regulators to intensify pressure on firms to increase their investment in high-quality ERM systems to signal a commitment to sound risk governance, curbing managerial opportunism, and monitoring decisions detrimental to firms' reputations and value.