Aligning Corporate Governance with Enterprise Risk Management Adoption in the Nigerian Deposit Money Banks

Authors

  • Ishaya John Dabari Department of Accountancy, School of Management and Information Technology, Modibbo Adama University of Technology, Yola, Adamawa State, Nigeria
  • Sini Fave Kwaji Department of Accountancy, School of Management and Information Technology, Modibbo Adama University of Technology, Yola, Adamawa State, Nigeria
  • Mohamad Zulkurnai Ghazali Tunku Puteri Intan Safinaz School of Accountancy, College of Business, Universiti Utara Malaysia, Malaysia

DOI:

https://doi.org/10.52962/ipjaf.2017.1.2.9

Keywords:

Enterprise risk management, Corporate governance, ERM Adoption, Nigerian Banks

Abstract

The alarming rate of corporate failures as seen universally has necessitated this study apparently; the failures have known no boundary as it cuts across both the very big organizations and the very small corporate entities especially financial industries. The objective of this study is to align corporate governance (CG) with Enterprise Risk Management (ERM) adoption in the Nigeria Deposit Money banks (DMBs). The study adopted cross-sectional research design, survey method and questionnaire technique to collect data in 21 Nigerian DMBs. A total of 722 questionnaires were distributed, out of which 435 were found usable for further analysis. The research adopted Structural Equation Modeling in Stata for the data analysis. Empirical evidence suggests that internal audit effectiveness, human resource competency and top management commitment were positively significant. This implies that there is a significant positive relationship between CG and ERM adoption. Conclusively, the study has provided insightful results for the banking industry, regulators, practitioners and academia that will potentially assist in policy formulation, implementation and evaluation. Thus, a clarion calls for all the stakeholders in the industry to guarantee broad implementation of ERM in all the banks in compliance with the CBN Code of corporate governance.

References

Abdullatif, M., & Kawuq, S. (2015). The role of internal auditing in risk management: evidence from banks in Jordan. Journal of Economic and Administrative Sciences, 31(1), 30-50.

Aebi, V., Sabato, G., & Schmid, M. (2012). Risk management, corporate governance, and bank performance in the financial crisis. Journal of Banking & Finance, 36(12), 3213-3226.

Afolabi, A., & Dare, A. M. (2015). Corporate Governance in the Nigerian Banking Sector: Issues and Challenges. European Journal of Accounting Auditing and Finance Research. 3(5), 64-89.

Akpan, E. O., & Amran, N. A. (2014). Board characteristics and company performance: Evidence from Nigeria. Journal of Finance and Accounting, 2(3), 81-89.

Beasley, M. S., Clune. R., & Hermanson, D. (2006). The impact of enterprise risk management on the internal audit function. [email protected] Kennesaw State University, USA.

Beasley, M., Branson, B., & Hancock, B. (2015) Report on the current state of enterprise risk oversight: Update on trends and opportunities. 6th Edition, February 2015. The ERM Initiative at North Carolina State University, Raleigh, NC. www.erm.ncsu.edu, Retrieved August 2015.

Bryman, A., & Bell, E. (2015). Business research methods. Oxford university press. The United Kingdom.

CBN. (2012). Exposure draft code for banks in Nigeria. Central Bank of Nigeria, 2012.

Ciocoiu, N., Dobrea, C., & Berea, G. (2009). Improving organisation performance through risk management in order to survive a crisis period. Review of International Comparative Management, 4(1), 481–488.

Code of Corporate Governance for Listed companies, (2011) by the Security and Exchange Commission, Nigeria.

COSO (2004).Committee of Sponsoring Organizations of the Tread way Commission. The (COSO, 2004). Enterprise risk management–integrated framework: executive summary, USA.

Dabari, I. J., & Saidin, S. Z. (2014). A theoretical framework on the level of risk management implementation in the Nigerian banking sector: The moderating effect of top Management support. Procedia-Social and Behavioral Sciences, 164(1), 627-634.

Dabari, I. J., & Saidin, S. Z. (2016). A Moderating role of Board Characteristics. International Journal of Economics and Financial Issues. 6(S4), 96-103.

Daud, W. N. W., Haron, H., & Ibrahim, D. N. (2011). The role of the quality board of directors in enterprise risk management (ERM) practices: Evidence from binary logistic regression. International Journal of Business and Management, 6(12), 205-211.

Desender, K. A. (2011). On the determinants of enterprise risk management implementation. Enterprise IT governance, business value and performance measurement, Nan Si Shi and Gilbert Silvius, eds., IGI Global. De Vaus, D. (2013). Surveys in Social Research, Routledge.

Fadun, O. S. (2013). Risk management and risk management failure: Lessons for business enterprises. International Journal of Academic Research in Business & Social Sciences, 3(2), 225-239.

Hines, C. S., & Peters, G. F. (2015). Voluntary risk management committee formation: Determinants and short-term outcomes. Journal of Accounting and Public Policy, 34(3), 267–290.

Hoyt, R. E., & Liebenberg, A. P. (2011). The value of enterprise risk management. Journal of Risk and Insurance, 78(4), 795-822.

Hudin, N. S., & Hamid, A. B. A. (2014). Drivers to the implementation of risk management practices: A conceptual framework. Journal of Advanced Management Science, 2(3), 163-169.

Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behaviour, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305-360.

Manab, N. A., & Kassim, I. (2012a). A moderating effect of leadership on the success of enterprise-wide risk management practices. In Proceedings of the 3rd International Conference on Business and Economic Research (3rd ICBER 2012) Conference, Bandung, Indonesia.

Manab, N. A., Kassim, I., & Hussin, M. R. (2010). Enterprise-wide risk management (EWRM) practices: between corporate governance compliance and value. International Review of Business Research Papers, 6(2), 239-252.

Nakpodia, E. D., Ayo, B. T., & Adomi, E. E. (2007). A better response rate for questionnaires: Attitudes of librarians in Nigerian University Libraries. Library Philosophy and Practice, 9(2), 50-56.

Njogo, B. O. (2012). Risk management in the Nigerian banking industry. Kuwait Chapter of Arabian Journal of Business and Management Review, 1(10), 100-109.

Owojori, A. A., Akintoye, I. R., & Adidu, F. A. (2011). The challenge of risk management in Nigerian banks in the post-consolidation era. Journal of Accounting and Taxation, 3(2), 23-31.

Paape, L., & Speklè, R. F. (2011). The adoption and design of enterprise risk management practices: An empirical study. European Accounting Review, 21(3), 533-564.

Razali, A. R., Yazid, A. S., & Tahir, I. M. (2011). The determinants of enterprise risk management (ERM) practices in Malaysian public listed companies. Journal of Social and Development Sciences, 1(5), 202-207.

Soltanizadeh, S., Rasid, S. Z. A., Golshan, N., Quoquab, F., & Basiruddin, R. (2014). Enterprise risk management practices among Malaysian firms. International Conference on Accounting Studies 2014, ICAS 2014, 18-19 August 2014, (pp. 332-337), Kuala Lumpur, MalaysiaProcedia-Social and Behavioral Sciences.

Spira, L. F., & Page, M. (2003). Risk management: the reinvention of internal control and the changing role of internal audit. Accounting Auditing & Accountability Journal, 16(4), 640-661.

Downloads

Published

2017-04-01

How to Cite

Dabari, I. J., Kwaji, S. F., & Ghazali, M. Z. (2017). Aligning Corporate Governance with Enterprise Risk Management Adoption in the Nigerian Deposit Money Banks. Indian-Pacific Journal of Accounting and Finance, 1(2), 4–14. https://doi.org/10.52962/ipjaf.2017.1.2.9

Issue

Section

Main Section