ENTERPRISE RISK MANAGEMENT AND FINANCIAL PERFORMANCE: MEDIATING ROLE OF STRATEGIC MANAGEMENT CAPABILITY AND MODERATING ROLE OF RISK CULTURE

Abstract

The research objective was to test the influence of earning risk management on financial performance of manufacturing companies with mediating effect of strategic management capability. Moderating effect of risk culture also used. Cross sectional data was collected from 290 employees via convenient sampling technique. SEM results shown that earning management has positive and significant effect on financial performance and strategic management capability. Further, strategic management capability also positively effect to financial performance. Indirect mediating effect results shown that strategic management capability significantly mediated between enterprise risk management and financial performance. Moderating effect result also indicated that risk culture strengthen the effect of strategic management capability on financial performance. The study with the significant findings contributing in the existing literature through extending the understanding of relationships to the manufacturing-sector context, where organizational structures, operational coordination, managerial practices, and employee-related factors are particularly important. The findings also have practical significance for manufacturing organizations because they indicate the importance of developing appropriate managerial strategies, human-resource practices, employee development initiatives, communication mechanisms, and organizational policies related to the significant factors identified in the study. By addressing these factors, manufacturing companies may be better positioned to improve their organizational processes and achieve more favorable outcomes.