The Contribution of Enterprise Risk Management to Firm Value - Empirical evidence from the North American and European Oil & Gas Sector

Abstract

This master thesis examines the contribution of Enterprise Risk Management (ERM) to firm value within the upstream oil and gas sector in Europe and North America. Given the industry’s high exposure to various risks, this study aims to evaluate whether the implementation of an ERM system can add value to firms operating in this sector. Notably, the upstream oil and gas sector, particularly in our chosen regions, has been strikingly understudied in existing literature, especially in relation to ERM’s influence on firm-performance-related dependent variables. Using a dataset spanning several years and encompassing diverse financial and non-financial indicators, a panel data analysis with fixed effects was employed to establish the relationship between ERM adoption and firm value. The findings reveal a statistically and economically significant positive impact of ERM, equivalent to the predominate view of current research.