Does Enterprise Risk Management Matter? A study of Swedish listed firms during the 2007-2008 Financial Crisis.

Abstract: Empirical findings on Enterprise Risk Management suggests that it can have a positive impact on firm performance, since it focuses on an integrated risk management framework which provides the firm with a better resource allocation. Other findings indicate the opposite, that Enterprise Risk Management should not have an impact on firm performance since shareholders should diversify firm-specific risks themselves and not be compensated for bearing such risk. This study examines the effect of Enterprise Risk Management on non-financial firms that were listed on the Stockholm Stock Exchange during the 2007-2008 financial crisis. More precisely, we analyse the relationship of Enterprise Risk Management with firm performance measured as buy-and-hold stock returns, together with a set of control variables. Major findings from this study suggest that Enterprise Risk Management does not have an impact on firm performance during times of crisis.