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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Autores principales:	Doureige J. Jurdi, Sam M. AlGhnaimat
Formato:	article
Lenguaje:	EN
Publicado:	MDPI AG 2021
Materias:	enterprise risk management firm characteristics firm performance firm risk insurance firms Risk in industry. Risk management HD61 Finance HG1-9999
Acceso en línea:	https://doaj.org/article/35475bb6972a4d61920d167c91bdf679
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spelling	oai:doaj.org-article:35475bb6972a4d61920d167c91bdf6792021-11-25T18:08:45ZThe Effects of ERM Adoption on European Insurance Firms Performance and Risks10.3390/jrfm141105541911-80741911-8066https://doaj.org/article/35475bb6972a4d61920d167c91bdf6792021-11-01T00:00:00Zhttps://www.mdpi.com/1911-8074/14/11/554https://doaj.org/toc/1911-8066https://doaj.org/toc/1911-8074We 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.Doureige J. JurdiSam M. AlGhnaimatMDPI AGarticleenterprise risk managementfirm characteristicsfirm performancefirm riskinsurance firmsRisk in industry. Risk managementHD61FinanceHG1-9999ENJournal of Risk and Financial Management, Vol 14, Iss 554, p 554 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	enterprise risk management firm characteristics firm performance firm risk insurance firms Risk in industry. Risk management HD61 Finance HG1-9999
spellingShingle	enterprise risk management firm characteristics firm performance firm risk insurance firms Risk in industry. Risk management HD61 Finance HG1-9999 Doureige J. Jurdi Sam M. AlGhnaimat The Effects of ERM Adoption on European Insurance Firms Performance and Risks
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.
format	article
author	Doureige J. Jurdi Sam M. AlGhnaimat
author_facet	Doureige J. Jurdi Sam M. AlGhnaimat
author_sort	Doureige J. Jurdi
title	The Effects of ERM Adoption on European Insurance Firms Performance and Risks
title_short	The Effects of ERM Adoption on European Insurance Firms Performance and Risks
title_full	The Effects of ERM Adoption on European Insurance Firms Performance and Risks
title_fullStr	The Effects of ERM Adoption on European Insurance Firms Performance and Risks
title_full_unstemmed	The Effects of ERM Adoption on European Insurance Firms Performance and Risks
title_sort	effects of erm adoption on european insurance firms performance and risks
publisher	MDPI AG
publishDate	2021
url	https://doaj.org/article/35475bb6972a4d61920d167c91bdf679
work_keys_str_mv	AT doureigejjurdi theeffectsofermadoptiononeuropeaninsurancefirmsperformanceandrisks AT sammalghnaimat theeffectsofermadoptiononeuropeaninsurancefirmsperformanceandrisks AT doureigejjurdi effectsofermadoptiononeuropeaninsurancefirmsperformanceandrisks AT sammalghnaimat effectsofermadoptiononeuropeaninsurancefirmsperformanceandrisks
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The Effects of ERM Adoption on European Insurance Firms Performance and Risks

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