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Unitary Boards And Mutual Fund Governance

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  • Sophie Xiaofei Kong
  • Dragon Yongjun Tang

Abstract

A unique governance structure for mutual funds is unitary board—one board overseeing all funds in the entire family. We find strong evidence for unitary board as an effective governance mechanism. Funds with unitary boards are associated with lower fees, are more likely to pass the economies of scale benefits to investors, are less likely to be involved in trading scandals, and rank higher on stewardship. In contrast, funds with larger or more independent boards charge higher fees and rank lower on stewardship. Our findings indicate that unitary boards of small size, rather than independent boards, may be more beneficial to fund shareholders.

Suggested Citation

  • Sophie Xiaofei Kong & Dragon Yongjun Tang, 2008. "Unitary Boards And Mutual Fund Governance," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 31(3), pages 193-224, September.
    • Handle: RePEc:bla:jfnres:v:31:y:2008:i:3:p:193-224
    DOI: 10.1111/j.1475-6803.2008.00237.x
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    References listed on IDEAS

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    Cited by:

    1. Elif Sisli Ciamarra & Abigail Hornstein, 2015. "Board Overlaps in Mutual Fund Families," Working Papers 92, Brandeis University, Department of Economics and International Business School.
    2. Emmanuel Mamatzakis & Bingrun Xu, 2021. "Does ownership structure affect performance? Evidence from Chinese mutual funds," Review of Quantitative Finance and Accounting, Springer, vol. 56(4), pages 1399-1435, May.
    3. Mamatzakis, Emmanuel & Xu, Bingrun, 2017. "Does corporate governance matter in fund management company: the case of china," MPRA Paper 76138, University Library of Munich, Germany.
    4. Jan Jaap Hazenberg, 2012. "Independence and focus of Luxembourg UCITS fund boards," LSF Research Working Paper Series 12-15, Luxembourg School of Finance, University of Luxembourg.
    5. Ooi, Elizabeth, 2020. "Directors who serve multiple pension funds: Are they conflicted or skilled?," Journal of Banking & Finance, Elsevier, vol. 113(C).

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