Research Article
The Analysis of Enterprise Risk Management and Earnings Volatility: Moderation of Audit Committee and Audit Quality
@INPROCEEDINGS{10.4108/eai.6-12-2018.2286322, author={Endah Ningtyas and Desi Adhariani}, title={The Analysis of Enterprise Risk Management and Earnings Volatility: Moderation of Audit Committee and Audit Quality}, proceedings={Proceedings of the 1st Sampoerna University-AFBE International Conference, SU-AFBE 2018, 6-7 December 2018, Jakarta Indonesia}, publisher={EAI}, proceedings_a={SU-AFBE}, year={2019}, month={8}, keywords={enterprise risk management; earnings volatility; audit committee effectiveness; audit quality}, doi={10.4108/eai.6-12-2018.2286322} }- Endah Ningtyas
Desi Adhariani
Year: 2019
The Analysis of Enterprise Risk Management and Earnings Volatility: Moderation of Audit Committee and Audit Quality
SU-AFBE
EAI
DOI: 10.4108/eai.6-12-2018.2286322
Abstract
This study aims to analyze the impact of enterprise risk management (ERM) implementation on earnings volatility with audit committee effectiveness and audit quality as the moderating variables. The effectiveness of ERM implementation is assessed using a disclosure index developed based on guidance issued by COSO. Earnings volatility is measured using the standard deviation of the firm's net income before extraordinary items, divided by total assets of the company. The effectiveness of the audit committee was assessed using a checklist of audit committee effectiveness criteria, and the auditquality was measured by dummy variables (Big Four and non-Big Four). Data from a sample of companies listed on the Indonesia Stock Exchange was collected for the period 2012-2016. The results of this study indicate that the effectiveness of ERM implementation has a negative associationwith earnings volatility. The effectiveness of the audit committee is found to strengthen the association between the effectiveness of ERM implementation and earnings volatility, but audit quality was found not havinga moderating effect. This research has a practical implication on improving the role of audit quality to complement the oversight function delivered by the audit committee.