The effects of ERM adoption on European insurance firms performance and risks
We investigate the effects of adopting enterprise risk management (ERM) on the performance and risks of European publicly listed insurance firms. Using a dataset for 24 years, we report new results which show that ERM adopters realize significant ERM premiums after controlling for other covariates a...
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| Veröffentlicht in: | Journal of risk and financial management 2021-11, Vol.14 (11), p.1-17 |
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| creator | Jurdi, Doureige J AlGhnaimat, Sam M |
| description | We investigate the effects of adopting enterprise risk management (ERM) on the performance and risks of European publicly listed insurance firms. Using a dataset for 24 years, we report new results which show that ERM adopters realize significant ERM premiums after controlling for other covariates and endogeneity. Several firm characteristics such as size, opacity, and the choice of external monitoring agents such as auditors are significant determinants of adopting ERM. We fill a gap in the literature by assessing the impact of adopting ERM on firm risks and report new findings for our sample, which show that ERM adopters effectively reduce firm total and systematic risks and, to a greater extent, idiosyncratic risk. Firm-level variables such as size, leverage, dividend payments events, and diversification impact firm total risk. Insurers use corporate events such as dividend payments to signal information about reducing risk. Industry and international diversification reduce firm total risk and idiosyncratic risk, respectively. |
| doi_str_mv | 10.3390/jrfm14110554 |
| format | Article |
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| fulltext | fulltext |
| identifier | ISSN: 1911-8074 |
| ispartof | Journal of risk and financial management, 2021-11, Vol.14 (11), p.1-17 |
| issn | 1911-8074 1911-8066 1911-8074 |
| language | eng |
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| source | MDPI - Multidisciplinary Digital Publishing Institute; EZB-FREE-00999 freely available EZB journals |
| subjects | Boards of directors Enterprise risk management Financial services firm characteristics firm performance firm risk Hypotheses insurance firms Insurance industry Solvency Volatility |
| title | The effects of ERM adoption on European insurance firms performance and risks |
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