Journal of Business and Economics, ISSN 2155-7950, USA August 2014, Volume 5, No. 8, pp. 1250-1261 DOI: 10.15341/jbe(2155-7950)/08.05.2014/006  Academic Star Publishing Company, 2014 http://www.academicstar.us 1250 Corporate Governance Practices in Listed Banks-Impact on Risk Management and Resulting Financial Performance * Ana Quaresma 1 , Renato Pereira 2 , Álvaro Dias 3 (1. Universidade Autónoma de Lisboa, Lisbon, Portugal; 2. Universidade Autónoma de Lisboa, Lisbon, Portugal and ISCTE-IUL, Lisbon, Portugal; 3. Instituto Superior de Gestão, Lisbon, Portugal) Abstract: This research aims to analyze the relation between the quality of corporate governance practices and the financial performance of international listed banks. In order to meet this goal the variables related to company returns—IL/GL; NL/TA; ROA; ROE and Tier 1—were associated with the following standards of corporate governance: independence of the board of directors (INDBD); independence of the president of the board of directors (INDPR); size of the board of directors (SZBD); voting power concentration (VPC) and the company`s shareholder independence indicator (BvDep). For the composition of the sample we selected listed banks in several European, American, and Japanese stock markets from the period between 2006 and 2009. Results show a significant relation between best corporate governance practices and financial performance of studied banks. This research confirms results attained in previous works but also provides evidence on previously unexplored relations namely between BvDep and IL/GL and NL/TA variables. Key words: corporate governance; risk management; financial performance JEL codes: G21, G32, G34 1. Introduction According to Hawley and Williams (1996) thorough review of literature on corporate governance this concept is related with the form of governance of an organization making sure that its internal and external processes are efficient and acceptable. Jensen and Meckling (1976) work is considered to be the starting point of modern literature on the subject of corporate governance after seminal propositions from Berle and Means (1932), and classical Adam Smith. Corporate governance practices must consider cultural and institutional variety across countries and the need to recognize different models of organization and control accordingly (Charkham, 1994). Implementation of “best practices of corporate governance” aiming the improvement of firm performance and thereby to ensure that financial gains are reasonably shared by everyone involved (OECD, 2004) seems to be * A four page short version of this article was published in the Proceedings of the 40th NBEA Annual Meeting. Ana Quaresma, Ph.D., Assistant Professor, Universidade Autónoma de Lisboa; research areas/interests: corporate governance, risk management. E-mail: anaquaresma25@gmail.com. Renato Pereira, Ph.D., Associate Professor, Universidade Autónoma de Lisboa and ISCTE-IUL; research areas/interests: strategic entrepreneurship, corporate governance. E-mail: pereiren@hotmail.com. Álvaro Dias, Ph.D., Full Professor, Instituto Superior de Gestão; research areas/interests: entrepreneurial marketing, banking marketing. E-mail: alvaro.dias1@gmail.com.