MODERATING EFFECT OF RISK COMMITTEE FINANCIAL EXPERTISE ON THE RELATIONSHIP BETWEEN ENTERPRISE RISK MANAGEMENT AND VALUE OF LISTED DEPOSIT MONEY BANKS IN NIGERIA

Abstract

The growing complexity of Nigeria's banking sector has intensified the demand for robust Enterprise Risk Management (ERM) frameworks to sustain firm value. This study investigates the moderating effect of Risk Committee Financial Expertise (ERMRCFE) on the relationship between ERM components (operation, strategy, and compliance,) and firm value among listed deposit money banks in Nigeria. The sample comprised 12 banks listed on the Nigerian Exchange Group as of December 2024. Using a correlational research design, panel data covering 2014–2024 were analysed through fixed-effects regression in Stata 17. Firm value, measured by Tobin's Q, was the dependent variable, while ERM operation, ERM strategy, and ERM compliance served as independent variables. Findings reveal that ERM operation and compliance positively and significantly influence firm value, while ERM strategy exert significant negative effects. Risk committee financial expertise moderated these relationships in different directions enhancing the impact of ERM strategy but weakening those of ERM operation and compliance. The study recommends that banks strengthen operational ERM integration, align strategic risk frameworks with performance drivers, and ensure risk committees maintain a balanced mix of expertise to support both compliance and adaptive governance. These measures will enhance governance effectiveness and improve market valuation in Nigeria's banking industry.

Keywords: Enterprise Risk Management, Firm Value, Risk Committee Financial Expertise, Tobin's Q, Nigeria