The Relationship between Enterprise Risk Management and Financial Value Creation Efficiency of Companies Listed on the Stock Exchange of Thailand
Keywords:
Enterprise Risk Management, Financial Value Creation Efficiency, Stock Exchange of ThailandAbstract
This study examined the relationship between Enterprise Risk Management (ERM) and the financial value creation efficiency of companies listed on the SET50 Index of the Stock Exchange of Thailand. The study analyzed 200 firm-year observations spanning the period from 2020 to 2024. ERM was measured using the Enterprise Risk Management Disclosure Index (ERMD), while financial value creation efficiency was assessed via the Weighted Average Cost of Capital (WACC) and Return on Invested Capital (ROIC). Multiple regression analysis was employed for data analysis. The results indicated that ERMD is positively and significantly associated with ROIC (p < 0.05) but showed no significant relationship with WACC (p > 0.10). This suggested that ERM did not directly reduce the cost of capital but served as a mechanism that enhanced internal investment efficiency and supported resource allocation decisions. These findings align with Shad et al. (2022) and Kumar and Agrawal (2024), who emphasize that risk management promotes strategic stability and long-term competitive advantage.
Control variables, including Return on Assets (ROA), Return on Equity (ROE), and Tobin’s Q, were positively and significantly related to ROIC, indicating that profitability and market valuation potential were key determinants of value creation. Industry-specific analysis revealed that the Property & Construction and Industrials sectors responded more strongly to ERM than highly stable sectors, suggesting that industries with higher earnings volatility benefit more from effective risk management. Overall, the study highlights ERM’s essential role in generating shareholder value and provides practical insights for designing risk management strategies and policies that enhance stability and sustainability in the Thai capital market.
References
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