Enterprise risk management, ESG disclosure and firm performance: evidence from the manufacturing sector in Vietnam

Abstract

Purpose This study examines the relationship between enterprise risk management, firm performance and ESG disclosure in Vietnam's manufacturing sector. Understanding how these governance mechanisms interact is important for firms operating in high-risk and sustainability-driven environments. Design/methodology/approach Using panel data from 200 manufacturing firms listed on HOSE and HNX from 2017 to 2022, we construct a COSO 2017-based enterprise risk management index and an ESG disclosure index derived from the S&P Global framework. A two-stage regression with a control function approach is applied to address endogeneity and estimate both direct and moderating effects on Tobin's Q and return on assets. Findings The results reveal a clear temporal distinction. Enterprise risk management increases market-based firm value (Tobin's Q) but reduces short-term accounting profitability (ROA). ESG disclosure significantly moderates these relationships: firms with stronger ESG disclosure amplify the positive impact of enterprise risk management on firm value and mitigate its negative effect on profitability. These findings indicate that enterprise risk management should be viewed as a long-term strategic investment rather than a short-term profitability tool. Research limitations/implications This study makes a timely contribution to the literature by demonstrating how ESG-aligned risk management improves financial performance and supports sustainable value creation in emerging economies. It underscores the strategic importance of integrating ESG into enterprise-wide risk frameworks to balance long-term resilience with short-term performance, providing actionable insights for policymakers, investors and corporate leaders. Originality/value This study offers new evidence from an emerging economy by jointly analyzing enterprise risk management, ESG disclosure and firm performance while explicitly addressing endogeneity. It highlights the complementary role of ESG disclosure in strengthening the effectiveness of enterprise risk management.