Enterprise risk management quality and financial distress risk: a real earnings perspective
Motivated by the recent decline in performance and liquidity crisis of African firms orchestrated by the COVID- 19 pandemic, this research examines the impact of real earnings management (REM) on financial distress risk (FDRisk), and whether enterprise risk management quality (ERMQ) moderates th...
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| Format: | Article |
| Language: | en |
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Penerbit Universiti Kebangsaan Malaysia
2025
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| Online Access: | http://journalarticle.ukm.my/26708/1/Pengurusan_73_3.pdf http://journalarticle.ukm.my/26708/ https://www.ukm.my/jurnalpengurusan/volume-main/vol73/ |
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| author | Sulaiman Ademola Oreshile, Nurul Shahnaz Mahdzan, Rozaimah Zainudin, |
| author_facet | Sulaiman Ademola Oreshile, Nurul Shahnaz Mahdzan, Rozaimah Zainudin, |
| author_sort | Sulaiman Ademola Oreshile, |
| building | Tun Sri Lanang Library |
| collection | Institutional Repository |
| content_provider | Universiti Kebangsaan Malaysia |
| content_source | UKM Journal Article Repository |
| continent | Asia |
| country | Malaysia |
| description | Motivated by the recent decline in performance and liquidity crisis of African firms orchestrated by the COVID-
19 pandemic, this research examines the impact of real earnings management (REM) on financial distress risk
(FDRisk), and whether enterprise risk management quality (ERMQ) moderates the effect. The study provides new
insights on whether firms with robust enterprise risk management (ERM) systems performs better than their
counterparts with no ERM systems. This research examines the impact of real earnings management (REM) on
FDRisk, and whether ERMQ moderates the effect. The study employs the least square dummy (LSDV) variable
two-way fixed effect estimator to analyse panel data from 186 non-financial firms operating in nine (9) sub
Saharan African countries. The findings indicate that REM worsens FDRisk. The results also suggest that firms
that implement high-quality enterprise risk management attenuate the negative effect of REM on FDRisk. We
further find that "board governance" and "corporate disclosure" quality are likely channels through which REM
exacerbates FDRisk. This study offers an empirical explanation of how REM worsens FDRisk and the alleviating
role of ERMQ, as corporations in weaker corporate governance (CG) regions seek strategies to discourage REM
and improve firms' financial health. |
| format | Article |
| id | my-ukm.journal.26708 |
| institution | Universiti Kebangsaan Malaysia |
| language | en |
| publishDate | 2025 |
| publisher | Penerbit Universiti Kebangsaan Malaysia |
| record_format | eprints |
| spelling | my-ukm.journal.267082026-03-05T07:18:19Z http://journalarticle.ukm.my/26708/ Enterprise risk management quality and financial distress risk: a real earnings perspective Sulaiman Ademola Oreshile, Nurul Shahnaz Mahdzan, Rozaimah Zainudin, Motivated by the recent decline in performance and liquidity crisis of African firms orchestrated by the COVID- 19 pandemic, this research examines the impact of real earnings management (REM) on financial distress risk (FDRisk), and whether enterprise risk management quality (ERMQ) moderates the effect. The study provides new insights on whether firms with robust enterprise risk management (ERM) systems performs better than their counterparts with no ERM systems. This research examines the impact of real earnings management (REM) on FDRisk, and whether ERMQ moderates the effect. The study employs the least square dummy (LSDV) variable two-way fixed effect estimator to analyse panel data from 186 non-financial firms operating in nine (9) sub Saharan African countries. The findings indicate that REM worsens FDRisk. The results also suggest that firms that implement high-quality enterprise risk management attenuate the negative effect of REM on FDRisk. We further find that "board governance" and "corporate disclosure" quality are likely channels through which REM exacerbates FDRisk. This study offers an empirical explanation of how REM worsens FDRisk and the alleviating role of ERMQ, as corporations in weaker corporate governance (CG) regions seek strategies to discourage REM and improve firms' financial health. Penerbit Universiti Kebangsaan Malaysia 2025 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/26708/1/Pengurusan_73_3.pdf Sulaiman Ademola Oreshile, and Nurul Shahnaz Mahdzan, and Rozaimah Zainudin, (2025) Enterprise risk management quality and financial distress risk: a real earnings perspective. Jurnal Pengurusan, 73 . pp. 1-15. ISSN 0127-2713 https://www.ukm.my/jurnalpengurusan/volume-main/vol73/ |
| spellingShingle | Sulaiman Ademola Oreshile, Nurul Shahnaz Mahdzan, Rozaimah Zainudin, Enterprise risk management quality and financial distress risk: a real earnings perspective |
| title | Enterprise risk management quality and financial distress risk: a real earnings perspective |
| title_full | Enterprise risk management quality and financial distress risk: a real earnings perspective |
| title_fullStr | Enterprise risk management quality and financial distress risk: a real earnings perspective |
| title_full_unstemmed | Enterprise risk management quality and financial distress risk: a real earnings perspective |
| title_short | Enterprise risk management quality and financial distress risk: a real earnings perspective |
| title_sort | enterprise risk management quality and financial distress risk: a real earnings perspective |
| url | http://journalarticle.ukm.my/26708/1/Pengurusan_73_3.pdf http://journalarticle.ukm.my/26708/ https://www.ukm.my/jurnalpengurusan/volume-main/vol73/ |
| url_provider | http://journalarticle.ukm.my/ |