The Role of Enterprise Risk Management on Firm Performance in the Merger and Acquisition Process Using Heckman's Two-Stage Model

Subject Areas : Financial engineering

nikoo mohammad sharifi ¹ , seyed ali nabavi chashmi ² , naser ali yadollahzade tabari ³

1 - Department of Financial Engineering, Babol Branch, Islamic Azad University, Babol, Iran
2 - Department of Financial Management, Babol Branch, Islamic Azad University, Babol, Iran
3 - Department of economic, Babol Branch,Islamic Azad University,Babol,Iran

Received: 2020-02-09 Accepted : 2020-05-25 Published : 2021-03-21

Keywords: Firm Performance, Enterprise Risk Management, merger, Heckman Two-Step Method,

Abstract :

Oppose to traditional risk management where individual risks are managed separately in "risk silos", corporate risk management enables companies to manage a wide range of risks in a seamless and comprehensive way. International studies have shown that the evolution of traditional risk management to a holistic perspective and the adoption of Enterprise risk management have enhanced the firm's performance from a strategic perspective. This study investigates the impact of enterprise risk management on the performance of listed companies in the Tehran Stock Exchange (measured by Tobin's Q ratio) in the merger and acquisition process using Heckman's two-stage model over the period 1392 to 1397. The statistical sample of the study consists of 54 target companies of Tehran Stock Exchange. The results of the first stage showed that the variables of firm size, financial leverage and industry control variable had a significant relationship with the determinants of enterprise risk management. Secondly, it was confirmed that organizational risk management had a significant impact on the performance of listed companies in the merger and acquisition process.