Enterprise risk management and firm performance: Empirical evidence from Ghana equity market

Figures & data

Table 1. Summary statistics

Variable	Obs	Mean	Std.Dev.	Min	Max
ROE	210	1.37	14.244	0.033	206.672
ROA	210	1.332	1.829	0.007	12.931
TOBINQ	210	0.716	2.537	0.001	20.667
ERMI	210	0.873	0.367	0.000	0.964
SIZE	210	8.946	21.402	15.345	292.755
EFF	210	0.610	2.213	0.001	21.716
OWN	210	0.567	0.504	0	1
AGE	210	5.647	7.017	2.000	23.000
LEV	210	0.772	0.371	0.023	11.435

Source: Authors Computations

Table 2. Correlation matrix

Variables	ROE	ROA	TobinQ	ERMI	SIZE	EFF	OWN	AGE	LEV
ROE	1.000
ROA	−0.041	1.000
TOBIN Q	0.547	0.021	1.000
ERMI	0.026	−0.484	−0.054	1.000
SIZE	0.920	0.156	0.527	−0.336	1.000
EFF	0.013	−0.034	−0.013	−0.090	0.031	1.000
OWN	0.148	−0.457	0.027	0.409	−0.194	−0.028	1.000
AGE	−0.042	0.387	−0.036	−0.399	0.286	0.173	−0.698	1.000
LEV	−0.150	−0.445	−0.027	0.084	−0.184	0.075	0.161	−0.163	1.000

Source: Authors Computations

Table 3. Regression analysis for financial firms and non-financial firms using fixed effect

Financial firms				Non-financial firms
Variables	ROA	TOBIN Q	ROE	ROA	TOBIN Q	ROE
Fixed Effect
ERMI	10.63***	3.622***	0.223	10.38***	4.363	0.524**
	(3.187)	(0.854)	(0.542)	(3.223)	(6.769)	(0.634)
SIZE	0.425	−0.353***	−0.093**	−0.302	0.173	−0.197***
	(0.262)	(0.070)	(0.036)	(0.203)	(0.427)	(0.040)
EFF	0.052	−0.025	0.703***	−0.003	0.0222	−0.023*
	(0.067)	(0.018)	(0.001)	(0.0665)	(0.140)	(0.013)
OWN	0.023	0.310	0.326***	3.432	1.990**	0.171*
	(2.126)	(0.192)	(0.116)	(1.631)	(0.798)	(0.099)
AGE	−0.069	0.041**	0.022**	0.062	−0.116	0.045***
	(0.076)	(0.020)	(0.010)	(0.064)	(0.134)	(0.0125)
LEV	0.877	0.152	−0.179	0.675	−0.512	−0.309
	(1.580)	(0.423)	(0.219)	(1.394)	(2.928)	(0.274)
Constant	−9.143**	3.706***	1.694**	1.797	−2.676	3.188***
	(4.507)	(1.208)	(0.674)	(3.693)	(7.755)	(0.726)
Observations	91	91	91	119	119	119
R-squared	0.169	0.390	0.543	0.131	0.120	0.234
Prob > F	0.001	0.001	0.000	0.000	0.000	0.000
Number of id	13	13	13	17	17	17

Source: Results in Data Analysis in Stata 13Significance level: * (10%), ** (5%), *** (1%). Values in parenthesis are the standard errors.

Table 4. Regression analysis for financial firms and non-financial firms using random effect

Financial firms				Non-financial firms
Variables	ROA	TOBIN Q	ROE	ROA	TOBIN Q	ROE
Random Effect
ERMI	7.804***	2.037***	0.062*	7.810***	−3.628*	0.388
	(3.000)	(0.613)	(0.389)	(2.833)	(1.957)	(0.385)
SIZE	0.354	−0.209***	−0.065**	−0.272	−0.098	−0.120***
	(0.252)	(0.053)	(0.029)	(0.195)	(0.176)	(0.031)
EFF	0.0292	−0.022	0.703***	−0.020	−0.006	−0.019
	(0.070)	(0.018)	(0.009)	(0.068)	(0.099)	(0.012)
OWN	−0.474	−0.151	0.051	0.529	1.946**	0.147
	(2.197)	(0.322)	(0.190)	(1.862)	(0.853)	(0.180)
AGE	−0.050	0.0251	0.013	0.044	−0.167***	0.026***
	(0.0732)	(0.0163)	(0.009)	(0.062)	(0.063)	(0.010)
LEV	−0.899	0.505*	−0.179	−0.576	−0.232	−0.227
	(1.398)	(0.264)	(0.156)	(1.212)	(0.831)	(0.162)
Constant	−5.531	2.138**	1.392***	3.481	5.798**	2.096***
	(4.331)	(0.903)	(0.524)	(3.487)	(2.832)	(0.507)
Observations	91	91	91	119	119	119
R-squared	0.392	0.410	0.532	0.315	0.278	0.345
Prob > F	0.000	0.000	0.000	0.000	0.000	0.000
Number of id	13	13	13	17	17	17

Source: Results in Data Analysis in Stata 13Significance level: * (10%), ** (5%), *** (1%). Values in parenthesis are the standard errors.

Table 5. Regression results

	(1)	(2)	(3)	(4)	(5)	(6)
Variables	RE 1	FE 1	RE 2	FE 2	RE 3	FE 3
	ROE		ROA		TOBIN Q
ERMI	0.709**	0.222	−0.283**	−0.267**	−0.171	−0.212*
	(0.338)	(0.266)	(0.124)	(0.113)	(0.125)	(0.117)
ERMI^2	−0.0301**	−0.0115	0.0153**	0.0198**	0.00822*	0.0115*
	(0.0133)	(0.0172)	(0.00706)	(0.00788)	(0.00475)	(0.00586)
SIZE	0.695***	0.700***	−0.00119	0.00186	0.0705***	0.0730***
	(0.00603)	(0.00743)	(0.00287)	(0.00332)	(0.00153)	(0.00209)
EFF	0.0615**	0.0362	−0.0459***	−0.0420***	−0.00342	−0.0107
	(0.0271)	(0.0238)	(0.00753)	(0.00855)	(0.0166)	(0.0116)
OWN	0.257***	0.107	−0.0762*	−0.0853*	0.00583	−0.0595
	(0.0988)	(0.105)	(0.0394)	(0.0447)	(0.0236)	(0.0458)
AGE	−0.245***	−0.106	0.00851	−0.0133	−0.0965**	−0.0926
	(0.0937)	(0.0663)	(0.0651)	(0.0817)	(0.0479)	(0.131)
LEV	−0.586	−5.165**	−1.124	1.107*	0.391	0.421
	(0.729)	(2.299)	(0.768)	(0.646)	(0.307)	(1.424)
Constant	−7.166***	−1.535	3.206**	0.913	0.716	1.042
	(2.289)	(2.263)	(1.515)	(0.912)	(0.960)	(1.136)
Inflection	1.70**	0.54	1.81**	2.36**	1.37*	1.81**
Observations	210	210	210	210	210	210
R-squared	0.979	0.997	0.461	0.062	0.337	0.339
Prob > F	0.000	0.000	0.000	0.000	0.000	0.000
Number of id	30	30	30	30	30	30

Source: Results in Data Analysis in Stata 13; Significance level: * (10%), ** (5%), *** (1%). Values in parenthesis are the standard errors.

Table 6. Quantile regression using ROE

	(1)	(2)	(3)	(4)	(5)
Variables	.20	.40	.60	.80	.95
ERMI	0.282***	1.700***	1.557***	1.168***	0.202
	(0.0406)	(0.0989)	(0.0950)	(0.106)	(0.317)
ERMI^2	−0.00923***	−0.0564***	−0.0513***	−0.0401***	−0.00718
	(0.00207)	(0.00505)	(0.00485)	(0.00540)	(0.0162)
SIZE	0.112***	0.704***	0.704***	0.700***	0.690***
	(0.00240)	(0.00584)	(0.00561)	(0.00624)	(0.0187)
EFF	0.0205	0.137**	0.109**	0.137**	0.0381
	(0.0218)	(0.0531)	(0.0510)	(0.0568)	(0.170)
OWN	0.00497	0.0278	0.0477*	0.0687**	0.217**
	(0.0119)	(0.0291)	(0.0279)	(0.0311)	(0.0932)
AGE	0.00138	−0.0436	−0.0616**	−0.197***	−0.432***
	(0.0119)	(0.0289)	(0.0278)	(0.0309)	(0.0926)
LEV	−0.148	−0.531	−0.387	−0.756**	−1.454
	(0.133)	(0.325)	(0.312)	(0.347)	(1.040)
Constant	−1.987***	−12.53***	−11.70***	−8.010***	−1.133
	(0.213)	(0.519)	(0.498)	(0.555)	(1.662)
Observations	210	210	210	210	210
Inflection	0.037	0.167	0.376	0.596	0.846
Pseudo R^2	1.79**	4.67***	4.32***	3.45***	0.23

Source: Results in Data Analysis in Stata 13Significance level: * (10%), ** (5%), *** (1%). Values in parenthesis are the standard errors.

Table 7. Quantile regression using ROA

	(1)	(2)	(3)	(4)	(5)
Variables	.20	.40	.60	.80	.95
ERMI	0.214***	0.150***	0.0931***	−0.117	−0.555
	(0.0168)	(0.0184)	(0.0319)	(0.105)	(0.940)
ERMI^2	−0.00705***	−0.00403***	−0.00183	0.00757	0.0260
	(0.000860)	(0.000941)	(0.00163)	(0.00536)	(0.0480)
SIZE	0.0704***	0.0697***	0.0688***	0.0686***	0.0702
	(0.000994)	(0.00109)	(0.00188)	(0.00620)	(0.0555)
EFF	0.0244***	0.0219**	0.0192	0.0230	−0.0485
	(0.00904)	(0.00990)	(0.0171)	(0.0564)	(0.505)
OWN	0.00438	0.0121**	0.0239**	0.0243	−0.0120
	(0.00495)	(0.00542)	(0.00938)	(0.0309)	(0.277)
AGE	0.00227	−0.00746	−0.0209**	−0.0663**	−0.168
	(0.00492)	(0.00539)	(0.00932)	(0.0307)	(0.275)
LEV	0.131**	0.0546	−0.0279	−0.0609	0.0352
	(0.0553)	(0.0605)	(0.105)	(0.345)	(3.087)
Constant	−1.605***	−1.250***	−0.847***	0.403	3.482
	(0.0883)	(0.0967)	(0.167)	(0.551)	(4.932)
Observations	210	210	210	210	210
Inflection	3.37***	0.39		1.11	0.45
Pseudo R^2	0.098	0.155	0.170	0.201	0.320

Source: Results in Data Analysis in Stata 13Significance level: * (10%), ** (5%), *** (1%). Values in parenthesis are the standard errors.

Table 8. Quantile regression using TOBIN Q

	(1)	(2)	(3)	(4)	(5)
Variables	.20	.40	.60	.80	.95
ERMI	−0.132***	−0.212***	−0.269***	−0.590***	−1.350***
	(0.0362)	(0.0406)	(0.0544)	(0.205)	(0.224)
ERMI^2	0.00451**	0.00750***	0.0100***	0.0239**	0.0502***
	(0.00185)	(0.00207)	(0.00278)	(0.0104)	(0.0114)
SIZE	−0.00256	−0.00517**	−0.00659**	−0.00905	−0.0124
	(0.00214)	(0.00239)	(0.00321)	(0.0121)	(0.0132)
EFF	−0.0221	−0.0133	−0.0262	−0.0634	−0.192
	(0.0194)	(0.0218)	(0.0292)	(0.110)	(0.120)
OWN	0.00451	0.00692	0.00570	0.0158	0.0385
	(0.0106)	(0.0119)	(0.0160)	(0.0602)	(0.0659)
AGE	0.0295***	0.0147	0.0188	−0.0343	−0.167**
	(0.0106)	(0.0119)	(0.0159)	(0.0598)	(0.0655)
LEV	−0.662***	−1.380***	−1.822***	−2.489***	−3.094***
	(0.119)	(0.133)	(0.179)	(0.672)	(0.736)
Constant	1.580***	2.824***	3.591***	6.040***	12.08***
	(0.190)	(0.213)	(0.286)	(1.073)	(1.176)
Observations	210	210	210	210	210
Inflection	1.12	1.83**	2.08**	1.52*	2.49***
Pseudo R^2	0.312	0.440	0.430	0.373	0.571

Source: Results in Data Analysis in Stata 13Significance level: * (10%), ** (5%), *** (1%). Values in parenthesis are the standard errors.

Table 9. Variance inflation factor

	VIF	1/VIF
Own	2.074	0.482
Age	1.708	0.586
Leverage	1.283	0.780
Ermd	1.239	0.807
Firmsize	1.161	0.861
Efficiency	1.038	0.964
Mean VIF	1.417	.

Table 10. Hausman’s test

	(b)	(B)	(b-B)	sqrt(diag(V_b-V_B))
	Fixed	Random	Difference	S.E.
ermd	0.0901451	0.3848651	−0.2947199	0.0100928
firmsize	0.7054952	0.7102039	−0.0047087
efficiency	0.7054952	0.7102039	−0.0047087
age	−0.0152985	−0.0331299	0.0178314
liqudity1	−6.241431	−1.112774	−5.128656	0.4037448

b = consistent under Ho and Ha; obtained from xtreg

B = inconsistent under Ha, efficient under Ho; obtained from xtreg

Test: Ho: difference in coefficients not systematic

chi2(6) = (b-B)’[(V_b-V_B)^(−1)](b-B)

= 263.91

Prob>chi2 = 0.0000

(V_b-V_B is not positive definite)