Mutual Fund Fees, Performance, and Governance Structure in Canada

47 Pages Posted: 16 Jan 2013 Last revised: 28 May 2013

See all articles by Zhongzhi Lawrence He

Zhongzhi Lawrence He

Brock University, Goodman School of Business

Martin I. Kusy

Brock University, Goodman School of Business

Deepak Singh

Brock University - Goodman School of Business

Samir Trabelsi

Brock University - Accounting

Date Written: January 15, 2013

Abstract

Taking advantage of the unique Canadian setting where two governance mechanisms coexist, this study empirically examines the impact of the presence of the board of directors, as an internal governance mechanism, on fees and performance of mutual funds. Furthermore, the impact of the board structure on fees and performance of corporate class funds is also analyzed. We find that corporate class funds, which have a separate board of directors for the fund, charge higher fees than trust funds. However, corporate class funds deliver superior performance that more than compensate for their higher fees. For corporate class funds, we find that a board with smaller size, CEO duality, and higher percentage of independent directors is more likely to charge lower fees. In addition, more independent boards are strongly associated with higher fee-adjusted performance. Our study provides valuable guidelines for Canadian investors and regulatory agencies.

Keywords: Mutual Funds, Governance Structure, Agency Theory, Stewardship Theory

JEL Classification: G14, G15, G35

Suggested Citation

He, Zhongzhi Lawrence and Kusy, Martin I. and Singh, Deepak and Trabelsi, Samir, Mutual Fund Fees, Performance, and Governance Structure in Canada (January 15, 2013). CAAA Annual Conference 2013. Available at SSRN: https://ssrn.com/abstract=2201213 or http://dx.doi.org/10.2139/ssrn.2201213

Zhongzhi Lawrence He

Brock University, Goodman School of Business ( email )

500 Glenridge Avenue
Finance
St. Catherine's, Ontario L2S 3A1
Canada

Martin I. Kusy

Brock University, Goodman School of Business ( email )

500 Glenridge Avenue
International Business and Strategy
St. Catherine's, Ontario L2S 3A1
Canada

Deepak Singh

Brock University - Goodman School of Business ( email )

500 Glenridge Avenue
International Business and Strategy
St. Catherine's, Ontario L2S 3A1
Canada

Samir Trabelsi (Contact Author)

Brock University - Accounting ( email )

St. Catharines, Ontario L2S 3A1
Canada

Register to save articles to
your library

Register

Paper statistics

Downloads
130
rank
215,717
Abstract Views
961
PlumX Metrics
!

Under construction: SSRN citations will be offline until July when we will launch a brand new and improved citations service, check here for more details.

For more information