The impact of enterprise risk management on institutional performance in Jordanian public shareholding companies

Abstract

This study examined the impact of Enterprise Risk Management (ERM) on institutional performance of public shareholding companies in Jordan based on COSO (2004) ERM Integrated Framework. Questionnaire survey was adopted as the research methodology for this study, and a total of 313 questionnaires were successfully collected. The obtained data was analyzed by Structural Equation Modeling Tool (Smart-PLS), and based on the analysis, implementation of ERM was found to have a significant influence on institutional performance. From the finding’s analysis, it was revealed that enterprise risk management framework had a role in improving the performance of extraction companies in Jordan. The analysis also highlighted that the increase of enterprise risk management framework implementation will increase the performance of the extraction companies in Jordan. Furthermore, all the independent variables (Internal Environment, Event Identification, Risk Assessment, Risk Response, Control Activities, Information and Communication, and Monitoring) are significant predictors, except for objective setting. These variables statistically and significantly predicted performance of extraction companies in Jordan. The findings from this study enable organizations to better understand the status of their ERM implementation and assist them in identifying areas of improvement, with regards to the processes within each ERM elements. Corresponding