Effects of Firm Size on Enterprise Risk Management of Listed Firms in Kenya

Kibet, Lawrence; Mouni, Jeoffrey Gekara; Wanjau, Kenneth

doi:10.9790/487x-16548695

Cited by 12 publications

(9 citation statements)

References 9 publications

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“…Zhao, Hwang and Low (2013) developed an enterprise risk management maturity model (ERMMM) consisting of 16 important ERM maturity criteria and presented 66 applicable best practices under these criteria and this can be applied in companies to measure maturity and identify areas of improvement. ERM studies such as Wanjohi and Ombui (2013); Yegon, Mouni and Wanjau (2014), Waweru and Kisaka (2012) have been conducted in the financial market of Kenya and mainly cover banking institutions and listed companies and only a few cover the insurance sector. Furthermore, the maturity of ERM has not been tested in the studies that have measured the value of ERM implementation.…”

Section: Statement Of the Problemmentioning

confidence: 99%

Evaluation of the Level of Enterprise Risk Management Adoption and Maturity of Insurance Companies in Kenya

Njagi¹,

Njuguna²

2017

IJFA

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Purpose: The purpose of this study was to evaluate the extent to which insurance companies in Kenya have adopted ERM process, and then to assess the maturity, challenges and strategies in the implementation of this process.Materials and methods: The research design adopted for the study is descriptive research. The researcher conducted a survey on the 49 insurance companies of Kenya to encapsulate the factors that are relevant in articulating the extent of adoption of ERM and the level of maturity. A sample of 196 respondents was selected from a population of 245 respondents. The study used quantitative and qualitative methods of data analysis. Statistical Package for Social Sciences (SPSS) version 20 program was used for analysis. The results were presented using tables and pie charts. Similarly, qualitative data was summarized and categorized according to common themes and presentedin continuous prose form.Results: The study concluded that organizational related challenges hindered implementation of ERM programs. Results revealed that inadequate application of the risk management framework, ambiguity in roles and responsibilities in risk management, complexities in risk measurement, lack of embodiment of ERM in organizational culture, difficulty in risk quantification, linking risk information to strategic decision making, ensuring that all decisions remain within the organization’s risk tolerance, proactively identifying current and emerging risks, cost and budgetary constraints, misalignment of the risk and business operating models, risk management not seen as a priority by top management and inadequate information to make risk-based decisions hindered implementation of ERM frameworks among insurance firms in Kenya. The findings imply that organization related challenges have a significant effect on ERM implementation.Recommendations: The study recommends that there should be better organizational strategies to help improve implementation of ERM programs. It was found that building a strong risk culture, engaging consultants, building a dedicated ERM function, committed board of directors and top management, developing risk appetite statement, appointment of a Chief Risk Officer (CRO) and availing ERM budgets improved the implementation of ERM programs. Key words: enterprise risk management, adoption, maturity

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Section: Statement Of the Problemmentioning

confidence: 99%

Evaluation of the Level of Enterprise Risk Management Adoption and Maturity of Insurance Companies in Kenya

Njagi¹,

Njuguna²

2017

IJFA

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“…Chandrapala and Knapkova (2013) stated that even though all firms operate in the same industry and interact with same external variables, their financial performances are not the same as a number of internal factors could be responsible for firm performance such as firm size, age, debt ratio, quick ratio, inventory level, sales growth physical capital intensity and capital turnover as suggested by Pavelkova and Knápková (2009). Yegon, Mouni and Wanjau (2014) citing Kamar, Rajan and Zingales (2001) suggested that what determines a firm size is the ownership of physical assets which are critical resources. The neoclassical theory of firm size supported by Lucas (1978) also looked at the firm size in terms of per capita capital in form of investment return and research and development.…”

Section: Introductionmentioning

confidence: 99%

Empirical Investigation of the Interactions between Firm Size and Firm’s Financial Performance: A Study Based on Brewery Sector of Nigeria

Inyiama¹,

N²

2014

JFBM

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The aim of the study was to evaluate the extent to which Earnings Per Share is influenced by the level of fixed assets maintained by brewery firms in the Nigeria brewery industry. It sought to determine the significance and nature of the interactions between firm size and financial performance in Nigeria brewery industry from 2000 to 2013. The Engle and Granger 2-step cointegration approach, in a simple regression framework, was adopted in the data analysis with a model to estimate the error correction period. The time series data were tested for stationarity to avoid spurious regression, applying the Augmented Dickey Fuller (ADF) procedure. The test revealed that the study variables were integrated of the same order I(2), indicating a possible cointegration. Firm Size has both short and long term positive effect on EPS; with a significant long run influence. There is no causality running from either EPS to Total Assets or otherwise at both periods. The implication is that firm size does not granger cause EPS and vice versa in Nigeria brewery industry. The study further reveals that the distortions affecting EPS, resulting from firm size, in the long run, could be corrected in approximately six (6) months. Consequently, to improve on financial performance, the firms within the industry should strive to fully automate their production lines, thereby increasing their asset base, in order to enhance product quality and packaging, meet the demands of customers at short notice, remain relevant amidst stern competition in the industry and avoid stock out costs.

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“…The studies of Yegon, Mouni and Wanjau (2014), citing Kajola (2008), suggested that what determines a firm size is the ownership of physical assets which are critical resources. This found that sales and assets are not specifically the appropriate methods of measurement for size; the important factor would be how agency transactions and the range of costs influence profits.…”

Section: Statement Of the Problemmentioning

confidence: 99%

The Relationship among Cash Flow, Firms’ Size and Financial Performance of Food and Beverage Companies Listed on the Nigerian Stock Exchange (NSE)

Owolabi¹

2022

ijird

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IntroductionFinancial performance is fundamental in business world; it is one of the required tools of business management (Francoise, Gerald and Mansi, 2005). Performance can also be used as a measure to control organizational growth and development. The performance of an organization unfolds the level of improvement made by a company or firm within a period of time that is, financial performance serves as an instrument that measures the success of a company. Financial performance is often used as a benchmark for investors to invest their funds in a firm or company which is of requisite importance for investors, stakeholders and economy at large. According to Mirza and Javed (2013), for investors, the return on their investment is highly valuable, and a well-performing business can bring high and long-term return for their investors. Moreover, financial performance of a company will improve the income of its employees, bring better quality

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Effects of Firm Size on Enterprise Risk Management of Listed Firms in Kenya

Cited by 12 publications

References 9 publications

Evaluation of the Level of Enterprise Risk Management Adoption and Maturity of Insurance Companies in Kenya

Evaluation of the Level of Enterprise Risk Management Adoption and Maturity of Insurance Companies in Kenya

Empirical Investigation of the Interactions between Firm Size and Firm’s Financial Performance: A Study Based on Brewery Sector of Nigeria

The Relationship among Cash Flow, Firms’ Size and Financial Performance of Food and Beverage Companies Listed on the Nigerian Stock Exchange (NSE)

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