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Corporate governance practices and comprehensive income

Erika López-Quesada, María-del-Mar Camacho-Miñano, Samuel O. Idowu

Corporate Governance

ISSN: 1472-0701

Article publication date: 13 February 2018

Issue publication date: 1 June 2018

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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.

Keywords

Citation

López-Quesada, E., Camacho-Miñano, M.-d. and O. Idowu, S. (2018), "Corporate governance practices and comprehensive income", Corporate Governance, Vol. 18 No. 3, pp. 462-477. https://doi.org/10.1108/CG-01-2017-0011

Publisher

:

Emerald Publishing Limited

Copyright © 2018, Emerald Publishing Limited

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