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Does internal control process and firm characteristics improve firm value? An empirical analysis in the manufacturing sector
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Anju Kalluvelil Janardhanan 
, Uma Vakadae Ramkumar
This work is licensed under a Creative Commons Attribution 4.0 International License.
Abstract
The purpose of this research is to investigate the role of enterprise risk management (ERM), Big4 auditors and firm characteristics on firm value. This population study was conducted in the Indian manufacturing sector. Annual panel data for 11 years (2007–2017) was collected from 60 firms on the National Stock Exchange (NSE). Empirical findings prove that there is variation in Tobin’s Q but no difference in return on assets (ROA) and return on equity (ROE) among firms that have implemented ERM and included Big4 audit firms. The study documents that Q was influenced by the implementation of ERM, liquidity, firm age and firm size. Findings reveal that ERM, firm size, leverage, firm age, liquidity and firm complexity impacted ROA. The study outcome also shows ROE was affected by leverage, firm size, liquidity and firm complexity. This study is a valuable addition to the existing studies on the Indian manufacturing sector and has contributed incredible insights to the empirical literature on firm value from the multidimensional outlook of the purchasers, management, and investors. The findings have several implications for investors, managers and researchers.
Keywords: Enterprise Risk Management, Big4 Auditor, Firm Characteristics, Firm Value, India, Manufacturing sector, Tobin’s Q, ROA, ROE, Internal Control
Authors’ individual contribution: Conceptualisation — A.K.J.; Methodology — A.K.J.; Software — A.K.J.; Validation — A.K.J.; Formal Analysis — A.K.J.; Writing — Original Draft — A.K.J.; Writing — Review & Editing — A.K.J. and U.V.R.; Supervision — U.V.R.
Declaration of conflicting interests: The Authors declare that there is no conflict of interest.
JEL Classification: D22, G32, G34
Received: 03.03.2022
Accepted: 20.04.2022
Published online: 22.04.2022
How to cite this paper: Janardhanan, A. K., & Ramkumar, U. V. (2022). Does internal control process and firm characteristics improve firm value? An empirical analysis in the manufacturing sector. Corporate Ownership & Control, 19(3), 101–111. https://doi.org/10.22495/cocv19i3art7
