The role of enterprise risk management as a mediator of the influence of profitability and risk management committees on the value of banking companies listed on the indonesia stock exchange in 2019-2023
Keywords:
Profitability, Return on Assets, Risk Management Committee, Enterprise Risk Management, Firm ValueAbstract
This study aims to examine the effects of profitability and the Risk Management Committee on firm value, with Enterprise Risk Management (ERM) serving as a mediating variable, in banking companies listed on the Indonesia Stock Exchange during the 2019–2023 period. Profitability is proxied by Return on Assets (ROA), while firm value is measured using Tobin’s Q. The Risk Management Committee and ERM are measured based on the extent of disclosure in the companies’ annual reports. This study employs a quantitative approach using secondary data obtained from financial statements and annual reports. The sample was selected through purposive sampling, resulting in 33 banking companies and a total of 165 observations. The relationships among variables were analyzed using panel data regression with EViews 12, while the mediating role of ERM was examined using the Sobel test. The results indicate that profitability has a negative and significant effect on firm value. Similarly, ERM also exerts a negative and significant effect on firm value. In contrast, profitability has a positive and significant effect on ERM. The Risk Management Committee, however, does not have a significant effect on either firm value or ERM. Furthermore, the mediation analysis reveals that ERM mediates the relationship between profitability and firm value but does not mediate the relationship between the Risk Management Committee and firm value. These findings highlight the complex role of ERM in influencing firm value within the Indonesian banking sector.
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