Enterprise Risk Management and Firm value: Evidence of Indonesia before and during Covid-19

Abstract

This research paper aims to investigate whether there is a relationship between the implementation of Enterprise Risk Management (ERM) and the firm value of listed companies in Indonesia, specifically at the time of crises. A sample of non-financial Indonesia listed companies during the period before the Covid-19 pandemic (2019) and during the Covid-19 pandemic (2020) were used to investigate this relationship. According to this study’s findings, our results indicate that in the circumstances before the Covid-19 pandemic there was a significant negative relationship between ERM implementation and company value. During the Covid-19 pandemic, we find no significant association between ERM implementation and company value because Indonesian companies’ financial performance has experienced a decline. Our results suggest that companies should continue to improve their ERM implementation and investors can use this as a consideration for investing. Limited time period and prior research have become a limitation to our research as by the time of the research, the pandemic is still ongoing.