Statistical Simulation
fazel tamoradi
Abstract
Economic institutions operating in capital markets face a variety of risks that, if not effectively managed, can lead to financial instability or bankruptcy. This study explores how regulatory and environmental factors influence enterprise risk management (ERM) and its resulting financial outcomes. The ...
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Economic institutions operating in capital markets face a variety of risks that, if not effectively managed, can lead to financial instability or bankruptcy. This study explores how regulatory and environmental factors influence enterprise risk management (ERM) and its resulting financial outcomes. The objective is to identify key elements that enhance ERM effectiveness and assess their impact on financial performance indicators such as financial ratios, market share, and corporate social responsibility. Using a descriptive-survey methodology, the study gathers quantitative data from financial managers and accounting heads in Iranian capital market companies. A structured questionnaire consisting of 54 items on a 5-point Likert scale was developed and validated through expert review and exploratory factor analysis. Random sampling and Cochran’s formula determined a sufficient sample size of 384, though 475 questionnaires were distributed, and 405 valid responses were analyzed. Beyond its descriptive focus, the research adopts a descriptive-correlational approach to examine relationships among risk-related variables. Structural equation modeling (SEM) was used to test hypotheses and evaluate the simultaneous effects of various components—such as information environment quality, competitive strategy, corporate governance, internal control, and management structure—on financial performance outcomes. The results show that these regulatory and environmental factors significantly contribute to strengthening ERM practices, leading to greater financial stability and operational efficiency. The study provides practical insights for investors, managers, and policymakers, demonstrating how external influences can shape robust risk management frameworks and improve financial performance. It also enriches the risk management literature by emphasizing the complex, multidimensional nature of enterprise risks.
