Advanced Search
MyIDEAS: Login to save this paper or follow this series

The impact of duality on managerial decisions and performance: Evidence from the mutual fund industry

Contents:

Author Info

  • Kempf, Alexander
  • Pütz, Alexander
  • Sonnenburg, Florian
Registered author(s):

    Abstract

    We study the decisions and performance of managers who are also chair of the board (duality managers). We hypothesize that duality managers take more risky decisions and deliver worse performance than non-duality managers due to reduced level of control and replacement risk. Using the mutual fund industry as our laboratory we provide strong support for these hypotheses: Duality managers take risk that they could easily avoid, deviate from their benchmarks, make extreme decisions, and, consequently, deliver extreme performance outcomes. Furthermore, their average underperformance is 2.5 percent. All effects are the stronger, the more power the manager has in the board. --

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://econstor.eu/bitstream/10419/85345/1/770630138.pdf
    Download Restriction: no

    Bibliographic Info

    Paper provided by University of Cologne, Centre for Financial Research (CFR) in its series CFR Working Papers with number 12-06 [rev.].

    as in new window
    Length:
    Date of creation: 2013
    Date of revision:
    Handle: RePEc:zbw:cfrwps:1206r

    Contact details of provider:
    Postal: Albertus Magnus Platz, 50923 Köln
    Phone: 0221 / 470 5607
    Fax: 0221 / 470 5179
    Email:
    Web page: http://cfr-cologne.de/english/version06/html/home.php
    More information through EDIRC

    Related research

    Keywords: Manager duality; governance; managerial decisions; agency conflicts; mutual funds;

    Find related papers by JEL classification:

    This paper has been announced in the following NEP Reports:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Boone, Audra L. & Casares Field, Laura & Karpoff, Jonathan M. & Raheja, Charu G., 2007. "The determinants of corporate board size and composition: An empirical analysis," Journal of Financial Economics, Elsevier, Elsevier, vol. 85(1), pages 66-101, July.
    2. Cotter, James F. & Shivdasani, Anil & Zenner, Marc, 1997. "Do independent directors enhance target shareholder wealth during tender offers?," Journal of Financial Economics, Elsevier, Elsevier, vol. 43(2), pages 195-218, February.
    3. John C. Adams & Sattar A. Mansi & Takeshi Nishikawa, 2010. "Internal Governance Mechanisms and Operational Performance: Evidence from Index Mutual Funds," Review of Financial Studies, Society for Financial Studies, Society for Financial Studies, vol. 23(3), pages 1261-1286, March.
    4. Alok Kumar, 2009. "Who Gambles in the Stock Market?," Journal of Finance, American Finance Association, American Finance Association, vol. 64(4), pages 1889-1933, 08.
    5. Daniel, Kent, et al, 1997. " Measuring Mutual Fund Performance with Characteristic-Based Benchmarks," Journal of Finance, American Finance Association, American Finance Association, vol. 52(3), pages 1035-58, July.
    6. Jonathan B. Berk & Richard C. Green, 2004. "Mutual Fund Flows and Performance in Rational Markets," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 112(6), pages 1269-1295, December.
    7. Marcin Kacperczyk & Clemens Sialm & Lu Zheng, 2005. "On the Industry Concentration of Actively Managed Equity Mutual Funds," Journal of Finance, American Finance Association, American Finance Association, vol. 60(4), pages 1983-2011, 08.
    8. Linck, James S. & Netter, Jeffry M. & Yang, Tina, 2008. "The determinants of board structure," Journal of Financial Economics, Elsevier, Elsevier, vol. 87(2), pages 308-328, February.
    9. K. J. Martijn Cremers & Antti Petajisto, 2009. "How Active Is Your Fund Manager? A New Measure That Predicts Performance," Review of Financial Studies, Society for Financial Studies, Society for Financial Studies, vol. 22(9), pages 3329-3365, September.
    10. 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, Yale School of Management amz2470, Yale School of Management, revised 01 Nov 2008.
    11. Carhart, Mark M, 1997. " On Persistence in Mutual Fund Performance," Journal of Finance, American Finance Association, American Finance Association, vol. 52(1), pages 57-82, March.
    12. Martijn Cremers & Antti Petajisto, 2006. "How Active is Your Fund Manager? A New Measure That Predicts Performance," Yale School of Management Working Papers, Yale School of Management amz2370, Yale School of Management, revised 01 May 2009.
    13. Byrd, John W. & Hickman, Kent A., 1992. "Do outside directors monitor managers? *1: Evidence from tender offer bids," Journal of Financial Economics, Elsevier, Elsevier, vol. 32(2), pages 195-221, October.
    14. Susan E. K. Christoffersen & Richard Evans & David K. Musto, 2013. "What Do Consumers’ Fund Flows Maximize? Evidence from Their Brokers’ Incentives," Journal of Finance, American Finance Association, American Finance Association, vol. 68(1), pages 201-235, 02.
    15. Khorana, Ajay & Tufano, Peter & Wedge, Lei, 2007. "Board structure, mergers, and shareholder wealth: A study of the mutual fund industry," Journal of Financial Economics, Elsevier, Elsevier, vol. 85(2), pages 571-598, August.
    16. Ferris, Stephen P. & Yan, Xuemin (Sterling), 2007. "Do independent directors and chairmen matter? The role of boards of directors in mutual fund governance," Journal of Corporate Finance, Elsevier, Elsevier, vol. 13(2-3), pages 392-420, June.
    17. Golec, Joseph H., 1996. "The effects of mutual fund managers' characteristics on their portfolio performance, risk and fees," Financial Services Review, Elsevier, Elsevier, vol. 5(2), pages 133-147.
    18. Gottesman, Aron A. & Morey, Matthew R., 2006. "Manager education and mutual fund performance," Journal of Empirical Finance, Elsevier, Elsevier, vol. 13(2), pages 145-182, March.
    19. Tufano, Peter & Sevick, Matthew, 1997. "Board structure and fee-setting in the U.S. mutual fund industry," Journal of Financial Economics, Elsevier, Elsevier, vol. 46(3), pages 321-355, December.
    20. Renée B. Adams & Heitor Almeida & Daniel Ferreira, 2005. "Powerful CEOs and Their Impact on Corporate Performance," Review of Financial Studies, Society for Financial Studies, Society for Financial Studies, vol. 18(4), pages 1403-1432.
    21. Khorana, Ajay & Servaes, Henri & Wedge, Lei, 2006. "Portfolio Manager Ownership and Fund Performance," CEPR Discussion Papers, C.E.P.R. Discussion Papers 5931, C.E.P.R. Discussion Papers.
    22. Joseph Chen & Harrison Hong & Ming Huang & Jeffrey D. Kubik, 2004. "Does Fund Size Erode Mutual Fund Performance? The Role of Liquidity and Organization," American Economic Review, American Economic Association, American Economic Association, vol. 94(5), pages 1276-1302, December.
    23. Jianyun Tang & Mary Crossan & W. Glenn Rowe, 2011. "Dominant CEO, Deviant Strategy, and Extreme Performance: The Moderating Role of a Powerful Board," Journal of Management Studies, Wiley Blackwell, Wiley Blackwell, vol. 48(7), pages 1479-1503, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:zbw:cfrwps:1206r. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.