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Board Overlaps in Mutual Fund Families

Listed author(s):
  • Elif Sisli Ciamarra

    ()

    (Brandeis University)

  • Abigail Hornstein

    ()

    (Wesleyan University)

We examine a unique characteristic of mutual fund governance: a common set of di- rectors serving simultaneously on the boards of multiple funds within a fund family. At rst glance, this governance structure appears to bene t investors because it is associated with higher fund returns and better fund manager quality. However, funds with higher degrees of board overlap also charge higher marketing and distribution fees, which have been criticized as being the least transparent cost component for mutual fund investors. Board overlaps are also associated with detrimental unobserved actions by fund managers: window dressing and strategic performance transfer between funds occur more often in mutual fund families with greater degrees of director overlap. We conclude that director oversight of multiple funds is a mixed blessing.

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File URL: http://www.brandeis.edu/economics/RePEc/brd/doc/Brandeis_WP92.pdf
File Function: First version, 2015
Download Restriction: no

Paper provided by Brandeis University, Department of Economics and International Businesss School in its series Working Papers with number 92.

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Length: 45 pages
Date of creation: Sep 2015
Handle: RePEc:brd:wpaper:92
Contact details of provider: Postal:
MS032, P.O. Box 9110, Waltham, MA 02454-9110

Web page: http://www.brandeis.edu/economics/

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  3. Agarwal, Vikas & Gay, Gerald D. & Ling, Leng, 2014. "Window dressing in mutual funds," CFR Working Papers 11-07 [rev.3], University of Cologne, Centre for Financial Research (CFR).
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  16. Vikram Nanda, 2004. "Family Values and the Star Phenomenon: Strategies of Mutual Fund Families," Review of Financial Studies, Society for Financial Studies, vol. 17(3), pages 667-698.
  17. Erik R. Sirri & Peter Tufano, 1998. "Costly Search and Mutual Fund Flows," Journal of Finance, American Finance Association, vol. 53(5), pages 1589-1622, October.
  18. Solomon, David H. & Soltes, Eugene & Sosyura, Denis, 2014. "Winners in the spotlight: Media coverage of fund holdings as a driver of flows," Journal of Financial Economics, Elsevier, vol. 113(1), pages 53-72.
  19. Benjamin E. Hermalin & Michael S. Weisbach, 2003. "Boards of directors as an endogenously determined institution: a survey of the economic literature," Economic Policy Review, Federal Reserve Bank of New York, issue Apr, pages 7-26.
  20. José-Miguel Gaspar & Massimo Massa & Pedro Matos, 2006. "Favoritism in Mutual Fund Families? Evidence on Strategic Cross-Fund Subsidization," Journal of Finance, American Finance Association, vol. 61(1), pages 73-104, 02.
  21. Cremers, Martijn & Driessen, Joost & Maenhout, Pascal & Weinbaum, David, 2009. "Does Skin in the Game Matter? Director Incentives and Governance in the Mutual Fund Industry," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 44(06), pages 1345-1373, December.
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