Abstract:

This study aims to provide empirical evidence of the effect of Enterprise Risk Management (ERM) disclosure on company profitability and market value. Company profitability here is measured using Return on Assets (ROA) and the company’s market value is measured using Tobin's Q Ratio. While ROA is profitability measured solely as report-based accounting, a Tobin's Q is a measurement consisting of investor responses to company performance. In this research, we also evaluate whether ROA mediates the relationship between ERM and Tobin's Q Ratio. We analyze 69 non-financial companies listed on the Indonesia Stock Exchange, the IDX80 Index 2019, using three years of data spanning 2018-2019. ERM value generated from company’s annual report using content analysis. Using linear regression analysis, we found no significant effect on ERM implementation disclosure on ROA, but there is a significant negative effect on ERM's implementation disclosure on Tobin's Q Ratio. Meanwhile, the ROA itself has a positive effect on Tobin's Q, but ROA has no mediating role in the relationship between ERM and Tobin's Q.