Enterprise Risk Management, Corporate Governance and Firm Value: Empirical Evidence from Indonesian Public Listed Companies

Saiful Husaini

Abstract

The agency conflict in modern companies could be impact to firm value reducing. To solve this problem should be implemented the good  corporate governance and enterprise risk management (ERM). This study aimed to test whether the ERM implementation and corporate governance can enhance shareholder value. It uses the multiple regression analysis of 110 companies for the year 2010 to 2013. Results of this study concluded that the implementation of ERM positive effect on firm value. It means that the better implementation of ERM will be followed by increasing firm value. Furthermore, the size of the board of directors is also a positive influence on firm value it implies that the greater the number of director, the more effective supervision of the company so that the company's value will increase. This study also height the positive relationship between the independent board and firm value. It indicates that the higher the proportion of independent directors on the board of a company, the better the value of the company. Instead research shows managerial ownership negative effect on the value of the company. These results contradict the agency theory which states that one of the solutions to the agency conflicts is to increase managerial ownership.

Keywords: ERM, Board Size, Independent Board, Managerial Ownership, and Firm value.

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