LAUSR

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