Doctor of Philosophy
Carolyn M. Callahan
James M. Lukawitz
David M. Kemme
Enterprise Risk Management (ERM) includes the methods and processes used by organizations to manage risks and seize opportunities that maximize firm performance. Thus, the ERM framework can mitigate the occurrence of financial crisis while enhancing firms operating performance and potentially providing capital market benefits. This study uses a unique set of data obtained via survey of Internal Audit Function management and publicly disclosed financial information to empirically examine corporate governance factors associated with adoption of ERM, potential operational and market performance benefits associated with adoption, and the impact of the risk factors disclosures on the firm‘s cost of equity and debt. Specifically, this three (3) paper dissertation contributes to the existing academic literature by considering factors and benefits associated with Enterprise Risk Management (ERM). The first paper of the dissertation considers the audit committee and IAF as potential determinants of ERM adoption. The second paper of the dissertation provides evidence of operational and market performance benefits associated with firms adopting ERM. The third paper of the dissertation examines the potential cost of capital impacts associated with non-financial information, specifically, ERM related risk disclosures. Results of the study provide support for the hypothesized association between adoption and maturity of ERM processes and audit committee financial expertise as well as the internal audit function reporting independence. In addition, the results provide some evidence of a positive relationship between the assessed ERM process maturity and operational performance.Finally, results indicate that increased disclosure of risk factors associated with ERM process is associated with reduced cost of capital. Prior literature has relied primarily on surrogates to estimate ERM impacts. While the reported results are based on a limited sample of firms, it provides direct evidence on the factors related to adoption of ERM processes as well as the potential benefits of adoption. Given the magnitude of the investment in ERM, this dissertation provides empirical evidence that there are potential firm benefits realized on the investment.
Dissertation or thesis originally submitted to the local University of Memphis Electronic Theses & dissertation (ETD) Repository.
Soileau, Jared Scott, "Enterprise Risk Management: Adoption, Performance Benefits, and Disclosure Effects" (2010). Electronic Theses and Dissertations. 82.