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Does Skin in the Game Matter? Director Incentives and Governance in the Mutual Fund Industry

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  • Martijn Cremers
  • Joost Driessen
  • Pascal Maenhout
  • David Weinbaum

Abstract

We use a unique database on the ownership stakes and compensation of equity mutual fund directors to analyze whether the directors' incentive structure is related to fund performance. We find that governance plays an economically substantial and statistically significant role. The ownership stakes of both independent and non-independent directors matter for fund performance. Further, the various governance variables interact: funds with high director ownership outperform those with low director ownership only w

Suggested Citation

  • Martijn Cremers & Joost Driessen & Pascal Maenhout & David Weinbaum, 2005. "Does Skin in the Game Matter? Director Incentives and Governance in the Mutual Fund Industry," Yale School of Management Working Papers amz2470, Yale School of Management, revised 01 Nov 2008.
    • Handle: RePEc:ysm:wpaper:amz2470
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