Enterprise risk management and firm performance: role of quality of internal audit function as moderator
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Date
2009
Authors
Ai Ping, Teoh
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Journal ISSN
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Abstract
enterprise risk management (ERM) has emerged as one of the forefront management concepts in
nabling firm to effectively deal with uncertainties within its dynamic environment, thereby
nhancing its capacity to improve performance and build shareholder value. The role and
~sponsibilities of internal auditing have expanded with regards to ERM. Previous studies related
) ERM and its impact on firm performance found inconclusive results. This study examined
mpirically the relationship between the extent of ERM implementation to firm performance, and
1e moderating role of the quality of internal audit function in this relationship. The extent of
:RM implementation was conceptualized based on elements in COSO (2004), firm performance
tas measured based on financial and non-financial indic<}.tors, and the quality of internal audit
mction was examined according to the Standards in Professional Practice Framework. Data
nalysis used 112 responses obtained through mail questionnaires from companies in main board
of Bursa Malaysia. This study established that the extent of ERM implementation significantly
1fluences firm performance. The quality of internal audit function was found to significantly
1fluence the relationship between the extent of ERM implementation to firm performance. This
tudy also discovered significant difference between companies in the finance sector and nonmance
sector in terms of the extent of ERM implementation.
Description
Keywords
Risk management , Audit function