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Corporate governance practices and comprehensive income

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López-Quesada, Erika, Camacho-Miñano, María-del-Mar and Idowu, Samuel O. (2018) Corporate governance practices and comprehensive income. Corporate Governance: The international journal of business in society, 18 (3). pp. 462-477. ISSN 1472-0701

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Abstract

Purpose
The purpose of this paper is to analyze the effect of corporate governance practices on firms’ financial performance, as measured by comprehensive income (CI).

Design/methodology/approach
Using a sample of 237 firms from the Standards & Poor (S&P) 500 index during the years 2004-2009, multivariate statistical analyses are conducted to confirm the authors’ main hypothesis.

Findings
The results indicate that having high levels of corporate governance culture has a positive impact on a measure of firms’ financial performance, namely, CI. Furthermore, they indicate a positive correlation between a higher percentage of external directors and financial performance, and a negative relationship between number of board meetings and financial performance.

Originality/value
The main contribution of this research is that good corporate governance strategies deliver superior financial performance for businesses in terms of CI. This serves as a method of value creation, which is the ultimate goal of a business. In addition to the use of CI as an indicator of financial performance, a unique measure of corporate governance level is tested.

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