Enterprise Risk Management Committee and Firm Financial Performance: Mediating Role of Firm Size

Abstract

This study examined how firm size mediates the relationship between Enterprise Risk Management Committee (ERMC) characteristics and performance of deposit money banks in Nigeria from 2012 to 2022. ERMC size, activism, composition, gender diversity and expertise served as independent variables, while financial performance was used as the dependent variable and was measured with Return on Capital Employed (ROCE). Firm size acted as the mediating variable. Using an ex-post facto design, data from ten banks were analyzed with pooled panel least squares after conducting descriptive and correlation tests. The results revealed that, when mediated by firm size, ERMC size, composition, and activism had negative and non-significant effects on performance. However, ERMC gender diversity and expertise showed positive effects, with gender diversity being statistically significant. The study further found that ERMC expertise, gender diversity, and firm size positively influenced bank performance. It concluded that firm size effectively mediates ERMC influences on performance. The study recommends maintaining moderately sized risk committee, adhering regulations as to the number of times the ERMC should meet, leveraging firm size when considering gender diversity, and prioritizing expertise in ERMC membership for what was necessarily indispensable is that the risk management committee should be made up of experts not minding the size.