Enterprise Risk Management Implementation and Corporate Performance of Nigerian Consumer Goods Firms

The study investigates the linkage of Enterprise Risk Management (ERM) implementation maturity and the performance of listed Consumer Goods companies in Nigeria, an industry that is faced with high levels of foreign exchange volatility, inflation and supply chain disruptions. A quantitative, longitudinal panel data design was used in this study involving five high capitalization consumer goods companies (BUA Foods Plc, Nigerian Breweries Plc, Nestlé Nigeria Plc, Guinness Nigeria Plc, and Champion Breweries Plc) over five years (from 2019 to 2023). By content analysis of annual reports and corporate governance disclosures, a Composite ERM Implementation Index was developed, which included three elements: Risk Identification (RI), Risk Assessment (RA), Risk Monitoring & Control (RMC). The three dimensions for determining the corporate performance were market capitalization, Return on Assets (ROA) and Earnings per Share (EPS). The panel fixed effects regression models were estimated after adjusting for firm size and financial leverage. The composite ERM index exhibits significant positive effects on market capitalization (β = 0.342, p < 0.01), ROA (β = 0.287, p < 0.05), and EPS (β = 0.315, p < 0.01). The individual components that most significantly influence the test variables are Risk Monitoring & Control, with the positive effect of β = 0.408 (p < 0.01) for EPS and consistent with Agency Theory; Risk Assessment with the positive effect of β = 0.376 (p < 0.01) for ROA, and moderated by firm size, and on market capitalization there is a positive effect of Risk Identification, with β = 0.298 (p < 0.05). The relationship between financial leverage and RA-EPS is negative and statistically significant (β = -0.189 at 5% level of significance), suggesting that debt restrictions weaken the RA-EPS relationship. The integrated ERM index accounts for between 47.3% and 62.4% of the variance in performance within firms. The study findings were that the managers should focus on implementing integrated ERM instead of standalone ERM, in addition to monitoring the risk continually and controlling them to keep earnings stable and to boost the shareholder's value. Moderating effect of leverage indicate that high leverage firms might require customized ERM practices.