The Role of Quality Board of Directors in Enterprise Risk Management (ERM) Practices: Evidence from Binary Logistic Regression

Wan Norhayate Wan Daud, Hasnah Haron, Daing Nasir Ibrahim


The purpose of this research is to examine the factors associated with the level of adoption of Enterprise Risk
Management (ERM) among public listed companies in Malaysia. The aim of this particular study is to examine
the relationship between the quality of Board of Directors (BOD) with regard to the level of ERM adoption
within the companies involved. Binary Logistic Regression was conducted to test the hypothesis on surveyed
firms selected from the seven industries listed on the main board of Malaysia Bourse. The specific research
questions are: What is the level of ERM adoption among the Malaysian public listed companies?, Will quality of
Board of Directors affect the level of adoption of ERM of Malaysian public listed companies? An interesting
finding from this study is the positive correlation between the quality of BOD on the level of ERM adoption.
This study will be able to shed some insights into the ERM activities of multinationals from a developing
country’s perspective by identifying the level of stages that Malaysian public listed companies are adopting
ERM. Studies of the management of Enterprise Risk by multinationals from developing countries, including
Malaysia meanwhile, have been scarce. This research aims to fill this research gap by analysing the management
of risks in Malaysian multinationals, with a special focus on ERM.

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