Getting What You Paid For: Using Mutual Fund Governance to Predict the Activeness of Mutual Funds

Posted: 21 May 2019

See all articles by Aron A. Gottesman

Aron A. Gottesman

Pace University - Lubin School of Business - Department of Finance and Economics

Matthew R. Morey

Pace University - Lubin School of Business - Department of Finance and Economics

Date Written: May 4, 2014

Abstract

This paper examines the relationship between mutual fund governance and the activeness of equity mutual funds. Using a fund’s corporate culture as a proxy for its governance and controlling for other variables, we find that funds with the better governance are significantly more active than other funds. Further, we find the probability of finding a highly active fund increase significantly as the governance of the fund improves. We also find some evidence that the probability of finding a closet index fund increases as the governance of the fund declines. These results demonstrate that mutual fund governance should be considered carefully when making mutual fund investment decisions.

Keywords: Mutual Funds, Governance, Active Share

JEL Classification: G23

Suggested Citation

Gottesman, Aron A. and Morey, Matthew R., Getting What You Paid For: Using Mutual Fund Governance to Predict the Activeness of Mutual Funds (May 4, 2014). https://doi.org/10.3905/joi.2016.25.1.025. Available at SSRN: https://ssrn.com/abstract=2422270 or http://dx.doi.org/10.2139/ssrn.2422270

Aron A. Gottesman

Pace University - Lubin School of Business - Department of Finance and Economics ( email )

One Pace Plaza
New York, NY 10038
United States
212-346-1912 (Phone)
212-346-1573 (Fax)

Matthew R. Morey (Contact Author)

Pace University - Lubin School of Business - Department of Finance and Economics ( email )

One Pace Plaza
New York, NY 10038-1502
United States
212-618-6471 (Phone)

HOME PAGE: http://webpage.pace.edu/mmorey/

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