RISK INTELLIGENCE IN ACTION: HOW RISK MANAGEMENT SHAPES FIRM VALUE IN THAILAND’S EMERGING MARKETS?

Abstract

This study investigates the extent of Firm Risk Management Disclosure (FRMD) and its impact on Firm Value (FV) among 142 companies listed on the Market for Alternative Investment (MAI) in Thailand between 2017 and 2021. FRMD was classified into four categories, namely Strategic Risk (STR), Operating Risk (OPR), Financial Risk (FIR), and Compliance Risk (COR), while FV was assessed through stock market prices. Data were obtained from Thai 56-1 reports, and content analysis was undertaken using a structured checklist. The Disclosure Quality Level (DQL) was determined as the ratio of Actual Disclosure Scores to Maximum Disclosure Scores, with classification following the Corporate Governance Report standards of the Thailand Securities and Exchange Commission (SEC). Multiple Regression Analysis was applied, incorporating control variables such as Firm Size, Firm Age, Financial Auditor, Net Profit, Return on Assets (ROA), Return on Equity (ROE), and Leverage. The findings indicate that overall FRMD among MAI companies reached a “Good” level (79.45%). However, only 28.87% of firms disclosed information across all four risk categories. STR and OPR achieved a “Very Good” rating (88.73% and 85.21% respectively), FIR was rated as “Good” (79.58%), whereas COR was evaluated at the “Pass” level (55.63%).  The analysis further revealed varying effects of FRMD components on FV. STR demonstrated a negative association with FV, OPR exhibited a positive association, while FIR and COR showed no statistically significant relationships. Among the control variables, the quality of Financial Auditor and ROA were found to have a positive influence on FV. These outcomes enhance the understanding of risk disclosure practices in emerging markets and underscore the context-specific significance of risk communication effectiveness for small and medium-sized enterprises (SMEs) operating within Thailand’s alternative investment sector.