Mutual Fund Performance, Management Teams, and Boards

38 Pages Posted: 17 Apr 2013 Last revised: 27 Sep 2016

See all articles by John C. Adams

John C. Adams

University of Texas at Arlington

Takeshi Nishikawa

University of Colorado at Denver

Ramesh P. Rao

Oklahoma State University - Stillwater - Spears School of Business - Department of Finance

Date Written: August 31, 2016

Abstract

The recent surge in the use of team-managed funds in the mutual fund industry suggests that the benefits of team management might outweigh its costs. However, extant empirical evidence is not consistent with the view that team managed funds generate superior returns relative to individual managed funds. We argue that the benefits of team management are likely to be manifested in the presence of strong board monitoring because the potential free-rider problems within team-managed funds are alleviated. Our findings, that smaller boards and boards with a higher proportion of independent directors are positively associated with performance in team but not individual-managed funds, are consistent with this view. Our results suggest that in team-managed fund structures, where the potential free-riding problems exist, the presence of strong board monitoring improves fund performance.

Keywords: Mutual funds; board structure; organizational structure; management teams

JEL Classification: G20, G32, G34, L23, M11

Suggested Citation

Adams, John C. and Nishikawa, Takeshi and Rao, Ramesh P., Mutual Fund Performance, Management Teams, and Boards (August 31, 2016). Journal of Banking and Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2251191 or http://dx.doi.org/10.2139/ssrn.2251191

John C. Adams

University of Texas at Arlington ( email )

Box 19449 UTA
Arlington, TX 76019
United States
904-476-2946 (Phone)

Takeshi Nishikawa

University of Colorado at Denver ( email )

Box 173364
1250 14th Street
Denver, CO 80217
United States

Ramesh P. Rao (Contact Author)

Oklahoma State University - Stillwater - Spears School of Business - Department of Finance ( email )

Spears School of Business
Stillwater, OK 74078-4011
United States
405-744-1385 (Phone)
405-744-5180 (Fax)

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