The impact of enterprise risk management on institutional performance in Jordanian public shareholding companies

Mohammad Altanashat; Maged al Dubai; Sadun Alhety

Article Details

Research Article Volume 13 Issue 03

The impact of enterprise risk management on institutional performance in Jordanian public shareholding companies

Mohammad Altanashat • Maged Al Dubai • Sadun Alhety

Published: 01 Apr 2019 Issue:Volume 13 Issue 03 Apr 2019 Author details below

Mohammad Altanashat

Finance and administrative college, Almadinah International University Shahalam Malaysia

Maged al Dubai

Finance and administrative college, Almadinah International University Shahalam Malaysia

Sadun Alhety

Finance and administrative college, Almadinah International University Shahalam Malaysia

Balances scorecard enterprise risk management (ERM) institutional performance

Download PDF Reading View How to Cite BibTeX / RIS XML Metadata JSON Metadata View Issue

Article Metrics Report

Views, downloads, citations, engagement

Cited by

Current citation count

Abstract

Research summary

This study examined the impact of Enterprise Risk Management (ERM) on institutional performance of public shareholding companies in Jordan based on COSO (2004) ERM Integrated Framework. Questionnaire survey was adopted as the research methodology for this study, and a total of 313 questionnaires were successfully collected. The obtained data was analyzed by Structural Equation Modeling Tool (Smart-PLS), and based on the analysis, implementation of ERM was found to have a significant influence on institutional performance. From the finding’s analysis, it was revealed that enterprise risk management framework had a role in improving the performance of extraction companies in Jordan. The analysis also highlighted that the increase of enterprise risk management framework implementation will increase the performance of the extraction companies in Jordan. Furthermore, all the independent variables (Internal Environment, Event Identification, Risk Assessment, Risk Response, Control Activities, Information and Communication, and Monitoring) are significant predictors, except for objective setting. These variables statistically and significantly predicted performance of extraction companies in Jordan. The findings from this study enable organizations to better understand the status of their ERM implementation and assist them in identifying areas of improvement, with regards to the processes within each ERM elements.

Editorial Process

Article History

Published 01 Apr 2019

How to Cite

Altanashat, M., Dubai, M. A., & Alhety, S.. (2019). The impact of enterprise risk management on institutional performance in Jordanian public shareholding companies. Journal of Business and Retail Management Research, Volume 13 Issue 03.

Citation Context

Archive cited by No internal citing article yet

Reference depth 56 sources listed

DOI record DOI not listed

Citation signal 14 recorded citations

APA

Altanashat, M., Dubai, M. A., & Alhety, S.. (2019). The impact of enterprise risk management on institutional performance in Jordanian public shareholding companies. Journal of Business and Retail Management Research, Volume 13 Issue 03.

MLA

Altanashat, Mohammad, et al.. "The impact of enterprise risk management on institutional performance in Jordanian public shareholding companies." Journal of Business and Retail Management Research, Volume 13 Issue 03, 2019.

Chicago

Mohammad Altanashat, Maged Al Dubai, and Sadun Alhety. "The impact of enterprise risk management on institutional performance in Jordanian public shareholding companies." Journal of Business and Retail Management Research Volume 13 Issue 03 (01 Apr 2019).

Harvard

Altanashat, M., Dubai, M. A., & Alhety, S. (2019) The impact of enterprise risk management on institutional performance in Jordanian public shareholding companies. Journal of Business and Retail Management Research, Volume 13 Issue 03

References

Acharyya, M., & Mutenga, S. (2013). The benefits of implementing enterprise risk management: evidence from the non-life insurance industry. Enterprise Risk Management, 6(1), 22-24.
Arena, M., Arnaboldi, M., & Azzone, G. (2010). The organizational dynamics of enterprise risk management. Accounting, Organizations and Society, 35(7), 659-675.
Asiligwa, M. and Rennox, G. (2017) ‘The Effect of Internal Controls on the Financial Performance of Commercial Banks in Kenya’, IOSR Journal of Economics and Finance, 8(3), pp. 92–105. doi: 10.9790/5933-08030492105.
Ashour, Hossam Abdel Karim. (2015). the use of Balanced Scorecard (BSC) as a tool to measure the performance of Palestinian hospitals in the Gaza Strip. Unpublished thesis, Academy of Management and Politics for Postgraduate Studies
Alawattegama, K. K. (2017). The Impact of the Adoption of Enterprise Risk Management on the Industrial Financial Performance. International Journal of Research in Business and Social Science (2147-4478), 6(6), 9-20.
Al-Khadash, H. A., Jireis, J. R, (2017). COSO Enterprise Risk Management Implementation in Jordanian Commercial Banks and its Impact on Financial Performance.
Al Khattab, A., & Hood, J. (2015). The risk management process in Jordanian public shareholding organisations. International Journal of Business and Management, 10(8), 151.
Alshammari, A. M. (2011). The evaluation of the impact of using balanced scorecard on strategic performance in small and medium enterprises.
Beasley, M. S., Clune, R., & Hermanson, D. (2006). The impact of enterprise risk management on the internal audit function (Vol. 8113). Kennesaw, GA: Digital Commons@ Kennesaw State University.
Beasley, M. S., Clune, R., & Hermanson, D. R. (2005). Enterprise risk management: An empirical analysis of factors associated with the extent of implementation. Journal of accounting and public policy, 24(6), 521-531.
Brown, I., Steen, A., & Foreman, J. (2009). Risk management in corporate governance: A review and proposal. Corporate Governance: An International Review, 17(5), 546-558.
COSO - Executive Summary (2004) ‘Enterprise Risk Management — Integrated Framework’, New York, 3(September), pp. 1–16. doi: 10.1504/IJISM.2007.013372.
Curkovic, S., Scannell, T., Wagner, B., & Vitek, M. (2013). A longitudinal study of supply chain risk management relative to COSO’s enterprise risk management framework. Modern Management Science & Engineering, 1(1), 13-36.
Cheruiyot, S. K. (2013). An Investigation into Factors Affecting Implementation of The Balanced Score Card in State Corporations in Kenya: A Case Study of Kenya Bureau of Standards (Doctoral dissertation, The Open University of Tanzania).
Dafikpaku, E., Eng., M. B. A. B., & Mcmi, M. (2011, March). The strategic implications of enterprise risk management: a framework. In ERM Symposium (Vol. 48).
Eikenhout, L. C. A. (2015). Risk management and performance in insurance companies (Master's thesis, University of Twente).
Gatzert, N., & Martin, M. (2015). Determinants and value of enterprise risk management: empirical evidence from the literature. Risk Management and Insurance Review, 18(1), 29-53.
Gordon, L. A., Loeb, M. P., & Tseng, C. Y. (2009). Enterprise risk management and firm performance: A contingency perspective. Journal of Accounting and Public Policy, 28(4), 301-327.
Harner, M. M. (2010). Barriers to effective risk management. Seton Hall L. Rev., 40, 1323.
Haseena, Q. (2015) ‘The role of knowledge management in improving institutional performance. unpublished thesis, Mohammed Khaydar University - Biskra -.
Hoyt, R. E., & Liebenberg, A. P. (2011). The value of enterprise risk management. Journal of risk and insurance, 78(4), 795-822.
Ibrahim, S., Diibuzie, G., & Abubakari, M. (2017). The Impact of Internal Control Systems on Financial Performance: The Case of Health Institutions in Upper West Region of Ghana. International Journal of Academic Research in Business and Social Sciences, 7(4), 684-696.
Jwana, J. (2014) ‘The Extent of Implementation of Risk Management Practices in Jordanian Commercial Banks and its Impact on Financial Performance. Unpublished thesis, Hashemite University
Kairu, E. W (2013) ‘Effects of balanced scorecard on performance of firms in the service sector’, European Journal of Business and Management, 5(9), pp. 81–88. Available at:
http://www.iiste.org/Journals/index.php/EJBM/article/view/5127.
Kothari, C. R. (2004). Research methodology: Methods and techniques. New Age International.
Liebenberg, A. P., & Hoyt, R. E. (2003). The determinants of enterprise risk management: Evidence from the appointment of chief risk officers. Risk Management and Insurance Review, 6(1), 37-52.
Malik, M. F. (2017). Enterprise risk management and firm performance: Role of the risk committee (Doctoral dissertation, Queensland University of Technology).
Maraghi, D. (2012) ‘The Role of Human Resources Management Policies in Improving Institutional Performance: An Applied Study on Jordanian Public Institutions.
Matar, M., & Nauimat, Z. (2014). The response of the boards of directors in the distressed Jordanian public shareholding companies to the risk and repercussions of the global financial crisis. Jordan Journal of Business Administration, 10(1), 18-44.
Niknazar, P. (2011). Evaluating the use of BSC-DEA method in measuring organization s efficiency.
Njeri, C. K. (2015). Effect of internal controls on the financial performance of manufacturing firms in Kenya. Unpublished Thesis.
Nocco, B. W., & Stulz, R. M. (2006). Enterprise risk management: Theory and practice. Journal of applied corporate finance, 18(4), 8-20.
Nyagah, B. K. (2014). The effect of enterprise risk management on financial performance of pension fund management firms in Kenya. Unpublished, University of Nairobi.
Oppong, M., Owiredu, A., Abedana, V., & Asante, E. (2016). The impact of internal control on the performance of faith-based NGOs in Accra. Available at SSRN 2803451.
Pagach, D., & Warr, R. (2011). The characteristics of firms that hire chief risk officers. Journal of risk and insurance, 78(1), 185-211.
Passenheim, O. (2010). Enterprise risk management. Bookboon.
Ping, T. A., & Muthuveloo, R. (2015). The impact of enterprise risk management on firm performance: Evidence from Malaysia. Asian Social Science, 11(22), 149.
Quaddus, M., & Hofmeyer, G. (2007). An investigation into the factors influencing the adoption of B2B trading exchanges in small businesses.
Rao, A., & Marie, A. (2007). Current Practices of Enterprise Risk Management in Dubai. Management accounting quarterly, 8(3).
Risk and Insurance Management Society (2011) ‘An overview of widely used risk management standards and guidelines.
Robert, K., & David, N. (1992). The balanced scorecard measures that drive performance. Harvard Organizational business Rev., 70: 71-79. Stalk, G., (1988). Time the next source of competitive advantage. Harvard Bus. Rev, 66, 41-51.
Sabah .M, A.-N. & Khawla .H, K. (2012) Designing a Balanced Scorecard to Measure a Bank’s Performance: A Case Study’, International Journal of Business Administration, 3(4), pp. 44–53. doi: 10.5430/ijba. v3n4p44.
Setapa, M., Zakuan, N., Saman, M. Z. M., Ariff, M. S. M., Zaidin, N., & Sulaiman, Z. (2015, March). The Impact of Enterprise Risk Management Practices on Malaysian Public Higher Educational Institution Performance: A Literature Review. In 2015 International Conference on Industrial Engineering and Operations Management (IEOM) (pp. 1-7). IEEE.
Shad, M. K., & Lai, F. W. (2015). Enterprise risk management and firm performance validated through economic value-added factors. International Journal of Economics and Statistics, 3, 148-154.
Shannak, H. (2010) ‘the Impact of Enterprise Risk Management on Performance: The Case of Jordanian Industrial Corporations. Unpublished thesis. Jordan University.
Shoter, M. (2016) The Determinants of Enterprise Risk Management and Its Effect on Firm’s Value: Evidence from Firms listed in Amman Stock Exchange. Unpublished thesis, Yarmouk University.
Society of Actuaries (2006) ‘Enterprise Risk Management Specialty Guide’, (May), pp. 1–60.
Tarawneh, A. (2011) ‘Impact of investment in intellectual capital on institutional performance: A field study of Jordanian public institutions.
Tavakoli, S., & Talib, N. A. (2014). A Comprehensive Approach to Relationship between COSO ERM and Firm Performance in Construction Industry. International Research Journal of Applied and Basic Sciences. Vol, 8(12), 2214-2220.
Tahir, I. M., & Razali, A. R. (2011). The Relationship between enterprise risk management (ERM) and firm value: Evidence from Malaysian public listed companies. International journal of economics and management sciences, 1(2), 32-41.
Teoh, A. P., Lee, K. Y., & Muthuveloo, R. (2017). The Impact of Enterprise Risk Management, Strategic Agility, and Quality of Internal Audit Function on Firm Performance. International Review of Management and Marketing, 7(1), 222-229.
Tuan, N., & Hung, D. N. (2015, May). A Theoretical Model Studying the Impact of Internal Control on Performance and Risks of Vietnam Commercial Banks. In International Conference on Accounting. Danang, Vietnam (Vol. 22).
Uwizeye, P. B. (2013). Enterprise-wide risk management (EWRM): identification, analysis and management of implementation barriers within an African telecommunications enterprise (Doctoral dissertation, Heriot-Watt University).
Voinea, G., & Anton, S. G. (2009). Lessons from the current financial crisis. A risk management approach. Review of Economic and Business Studies, 3, 139-147.
Yazid, A. S., Hussin, M. R., & Daud, W. N. W. (2011). An examination of enterprise risk management (ERM) practices among the government-linked companies (GLCs) in Malaysia. International Business Research, 4(4), 94.