ISSN : 2047-2528

>>  Article Abstract
 
THE ANALYSIS OF COMPANY’S FINANCIAL PERFORMANCE BEFORE AND AFTER IMPLEMENTING ENTERPRISE RISK MANAGEMENT: AN EMPIRICAL STUDY IN INDONESIA
 
Arif Singapurwoko
 
 
ERM is a comprehensive and integrative framework to manage company’s risk in order to achieve company’s required goal. COSO Organization creates ERM framework to be incorporated as good corporate governance, therefore the company is able to provide more attention towards the risk that attached to the company. The purpose of this research is to acquire better insight on different affects to company’s financial performance caused by ERM implementation. Therefore it can determine whether ERM policy will provide significant difference to company’s financial performance before and after ERM implementation or not. This research uses 18 samples of non-banks public company that implement ERM. The sign of a company that implement ERM can be seen in the company’s annual report such as the company that assigns Chief Financial Officer, forms risk committee, and the presence of ERM implementation disclosure. The company’s financial performance is the measurement on how successful is the ERM implementation. The financial performance is proxy by income volatility (measured by earning per share), net profit margin, return on assets, and market to book. The statistics test used is paired sample t-test because the data used is normally distributed. Paired sample t-test in this research is used to test whether there is a significant difference in company’s financial performance during the period before implementing ERM with the period after implementing ERM. The result of comparative statistics test between company’s financial performance before and after implementing ERM indicates that from those four company’s financial performance indicator, income volatility is the only significant below 5% and the t value is greater than the t table. This explained that after ERM implemented by the company, it gives significant difference to income volatility.

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