Assessing the Impact of Risk Management Structure on Financial Firm
Performance: Evidence from Nigerian Services Sector Listed Firms
Authors: Martins Mustapha Abu, Abbas Umar Ibrahim
Abstract: With the advancement in the global economy, corporate risk management has been more impactfully implemented by firms and equally become a topic of scholarly studies. However, most of these studies are from different contexts. The purpose of this study is to assess the relationship between enterprise risk management (ERM) structure and the financial performance of Nigerian listed Services Sector firms from 2010 to 2019. The study relates risk governance structure to firms financial performance. The ex post facto research design was adopted, and data were collected from the annual reports and accounts of selected firms with a complete set of data for the study. From the study population of 25 firms, a final sample of 21 Services Sector firms. Descriptive and inferential statistics of regression analysis stacked as panel data was employed for data analysis. The study results revealed that risk management committee had a negative and insignificant relationship with ROA but significant with Tobin-Q. The size of the audit committee, however, exhibited a positive and insignificant relationship with ROA but a significant relationship with Tobin-Q. Furthermore, the study revealed an insignificant negative relationship between board finance experts with all financial performance (both ROA & Tobin-Q). However, chief risk officer exhibited a positive and significant relationship with firm performance (both ROA & Tobin-Q). It was, therefore, concluded that although the firms have structures of ERM governance in place to meet the legal requirement, the innovations aimed at improving market evaluation are yet to be deeply rooted in the listed services firms in Nigeria. It contributed through evidence of mixed relationship between risk management structure and firm performance in an under-investigated context such as Nigeria. It was recommended that the firms should adopt effective risk management structural practices as a strategy for enduring growth and survival in the face of environmental complexity. Also, further research is suggested to extend the study by widening the scope and context of the research.
Keywords: risk management structure, risk governance, performance, ROA, Tobin-q, Services firms Nigeria
DOI: 10.37394/23207.2022.19.60WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 19, 2022, Art. #60