Board of Director Configurations in Mutual Funds Sponsors: A Board-Level Analysis of Director Performance and Ownership

摘要

This study examines the manner in which boards of directors of mutual fund sponsors are configured, and whether board configuration is associated with fund performance. Today we see two prominent board governance configurations in the mutual fund industry. In one governance configuration, a single board is responsible for overseeing multiple investment funds; referred to in this study as a Single Board Configuration (SBC). With the other governance configuration each board is responsible for overseeing a single investment fund (or a cluster of funds); referred to as a Multiple Board Configuration (MBC). In a sample of the largest open-end mutual fund sponsors, I find MBC boards have significantly higher board-level objective-adjusted excess returns than SBC boards. I find no evidence that board composition, as measured by the total number of directors or the percent of directors that are non-interested, is significantly associated with excess returns. This study also includes an analysis of ownership of fund shares by members of the board of directors. The findings here suggest that smaller, less independent boards are more likely to be those where each of the non-interested directors has a large equity stake in the fund complex; however, there appears to be no relationship between this characterization of board ownership and board-level performance.