TY - JOUR
T1 - Independent Directors and Favoritism
T2 - When Multiple Board Affiliations Prevail in Mutual Fund Families
AU - Lai, Christine Whuei Wen
N1 - Publisher Copyright:
© 2016 Financial Management Association International
PY - 2016/9/1
Y1 - 2016/9/1
N2 - I examine whether independent directors with multiple board affiliations (IDMAs) trade off the interests of one fund relative to another (fund favoritism) or whether they benefit fund shareholders by increasing the level of the board's expertise. Using a sample of mutual funds affiliated with the top 55 fund sponsors from 2002 to 2008, I find that the presence of IDMAs is negatively related to performance/resource shifting across funds within fund families. IDMAs appear to decrease fund fees, increase the return gap associated with the unobserved actions of fund managers, and facilitate the transfer of information across funds in a fund family.
AB - I examine whether independent directors with multiple board affiliations (IDMAs) trade off the interests of one fund relative to another (fund favoritism) or whether they benefit fund shareholders by increasing the level of the board's expertise. Using a sample of mutual funds affiliated with the top 55 fund sponsors from 2002 to 2008, I find that the presence of IDMAs is negatively related to performance/resource shifting across funds within fund families. IDMAs appear to decrease fund fees, increase the return gap associated with the unobserved actions of fund managers, and facilitate the transfer of information across funds in a fund family.
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U2 - 10.1111/fima.12131
DO - 10.1111/fima.12131
M3 - Article
AN - SCOPUS:84971441728
SN - 0046-3892
VL - 45
SP - 529
EP - 582
JO - Financial Management
JF - Financial Management
IS - 3
ER -