Research article

Enterprise risk management practice and shareholders value: evidence from selected quoted firms in Nigeria

  • Received: 29 April 2020 Accepted: 27 May 2020 Published: 01 June 2020
  • JEL Codes: G32, G35, C1

  • This study examines business risks and risk management as well as their effects on shareholders' value using data from selected non-financial firms in the Nigerian Stock Exchange by focusing onreward systems to firm owners through dividend and other earning structures. The study employs panel data for 48 non-financial firms in the Nigerian Stock Exchange for the period 2011 to 2018. The panel data analytical framework is used in the empirical analysis with focus on the Random Effects estimation technique. The results show that in general,the effect of risk on shareholder value depends on the pattern of risk,as well as on the value being considered. The study also finds that increased business risk lowers both dividend per share and earnings per share of the firms. On the other hand,financial risks were shown to have positive impact on shareholder value,especially the value not related to dividend payout. Also,it is found that risk management based on institutional shareholding has the most effective positive impact on shareholder value. It is recommended that enterprise risk management implementation should not just be for compliance purposes among companies in Nigeria,but it must also be for the purposes of pursuing best practices and long-term survival.

    Citation: Marshal Iwedi, Oriakpono E. Anderson, Patience S. Barisua, Sulaiman A. Zaagha. Enterprise risk management practice and shareholders value: evidence from selected quoted firms in Nigeria[J]. Green Finance, 2020, 2(2): 197-211. doi: 10.3934/GF.2020011

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  • This study examines business risks and risk management as well as their effects on shareholders' value using data from selected non-financial firms in the Nigerian Stock Exchange by focusing onreward systems to firm owners through dividend and other earning structures. The study employs panel data for 48 non-financial firms in the Nigerian Stock Exchange for the period 2011 to 2018. The panel data analytical framework is used in the empirical analysis with focus on the Random Effects estimation technique. The results show that in general,the effect of risk on shareholder value depends on the pattern of risk,as well as on the value being considered. The study also finds that increased business risk lowers both dividend per share and earnings per share of the firms. On the other hand,financial risks were shown to have positive impact on shareholder value,especially the value not related to dividend payout. Also,it is found that risk management based on institutional shareholding has the most effective positive impact on shareholder value. It is recommended that enterprise risk management implementation should not just be for compliance purposes among companies in Nigeria,but it must also be for the purposes of pursuing best practices and long-term survival.


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