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Enterprise risk management and firm value within China's insurance industry

Enterprise risk management and firm value within China's insurance industry
Enterprise risk management and firm value within China's insurance industry
Orientation: The article discusses the relationship between enterprise risk management (ERM) and firm value.
Research purpose: The purpose of the study is to empirically examine the relationship between ERM and firm value. The study is undertaken within the context of the Chinese insurance industry.

Motivation for the study: Recent attempts to link ERM with firm value have been undertaken primarily in the USA and Europe and have produced ambiguous and inconclusive findings.

Research design, approach and method: Data was obtained from the China Insurance Regulatory Commission, a government body responsible for regulating insurance products and services in China. The data sample consisted of 135 insurance companies operating in China (in 2010). Regression modelling is employed to analyse the data.

Main findings: The results show the relationship between ERM and firm value at first appears statistically significant within a Pearson correlation matrix but then falls below statistical significance on closer scrutiny through regression analysis. Accordingly, it is recommended that insurers in China should not look to aggressive investment in ERM as a strategy for producing quick gains in firm value.

Practical/managerial implications: Risk managers should plan ERM development from a risk management maturity perspective, which equates the highest level of ERM development with ERM’s capacity to improve firm resilience to the unknown and serve as a mechanism for strategic decision-making.

Contribution/value-add: The study employed return on equity as a proxy for firm value, utilising ordinary least squares regression modelling to test propositions of the relationships between variables.
1680-7537
198-207
Li, Qiuying
4de2ae83-879e-4f25-8ff6-2e1121354853
Wu, Yue
e279101b-b392-45c4-b894-187e2ded6a5c
Ojiako, Udechukwu
ba4aa342-5408-48d7-b71d-8197388bbb80
Marshall, A.
93aa95a2-c707-4807-8eaa-1de3b994b616
Chipulu, M.
12545803-0d1f-4a37-b2d2-f0d21165205e
Li, Qiuying
4de2ae83-879e-4f25-8ff6-2e1121354853
Wu, Yue
e279101b-b392-45c4-b894-187e2ded6a5c
Ojiako, Udechukwu
ba4aa342-5408-48d7-b71d-8197388bbb80
Marshall, A.
93aa95a2-c707-4807-8eaa-1de3b994b616
Chipulu, M.
12545803-0d1f-4a37-b2d2-f0d21165205e

Li, Qiuying, Wu, Yue, Ojiako, Udechukwu, Marshall, A. and Chipulu, M. (2014) Enterprise risk management and firm value within China's insurance industry. Acta Commercii, 14 (1), 198-207. (doi:10.4102/ac.v14i1.198).

Record type: Article

Abstract

Orientation: The article discusses the relationship between enterprise risk management (ERM) and firm value.
Research purpose: The purpose of the study is to empirically examine the relationship between ERM and firm value. The study is undertaken within the context of the Chinese insurance industry.

Motivation for the study: Recent attempts to link ERM with firm value have been undertaken primarily in the USA and Europe and have produced ambiguous and inconclusive findings.

Research design, approach and method: Data was obtained from the China Insurance Regulatory Commission, a government body responsible for regulating insurance products and services in China. The data sample consisted of 135 insurance companies operating in China (in 2010). Regression modelling is employed to analyse the data.

Main findings: The results show the relationship between ERM and firm value at first appears statistically significant within a Pearson correlation matrix but then falls below statistical significance on closer scrutiny through regression analysis. Accordingly, it is recommended that insurers in China should not look to aggressive investment in ERM as a strategy for producing quick gains in firm value.

Practical/managerial implications: Risk managers should plan ERM development from a risk management maturity perspective, which equates the highest level of ERM development with ERM’s capacity to improve firm resilience to the unknown and serve as a mechanism for strategic decision-making.

Contribution/value-add: The study employed return on equity as a proxy for firm value, utilising ordinary least squares regression modelling to test propositions of the relationships between variables.

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Published date: 2014
Organisations: Centre of Excellence in Decision, Analytics & Risk Research

Identifiers

Local EPrints ID: 372073
URI: https://eprints.soton.ac.uk/id/eprint/372073
ISSN: 1680-7537
PURE UUID: 546f8a35-7fb3-42ab-b0cc-8d199f171841
ORCID for M. Chipulu: ORCID iD orcid.org/0000-0002-0139-6188

Catalogue record

Date deposited: 26 Nov 2014 17:23
Last modified: 06 Jun 2018 12:49

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