Directors' Ownership in the U.S. Mutual Fund Industry

55 Pages Posted: 4 May 2005

See all articles by Qi Chen

Qi Chen

Duke University - Fuqua School of Business

Itay Goldstein

University of Pennsylvania - The Wharton School - Finance Department

Wei Jiang

Columbia Business School - Finance and Economics

Date Written: August 2006

Abstract

The paper provides an empirical investigation of directors' ownership in the mutual fund industry. Our results show that, contrary to anecdotal evidence, a significant portion of directors hold shares in the funds they oversee. Moreover, ownership patterns are broadly consistent with the optimal-contracting hypothesis. That is, ownership is positively and significantly correlated with most variables that are predicted to indicate greater value from monitoring or indicate lack of other governance mechanisms. We find some evidence that directors exhibit performance chasing in their ownership choice.

Keywords: Optimal contracting, mutual funds, board directors

JEL Classification: G24, G35

Suggested Citation

Chen, Qi and Goldstein, Itay and Jiang, Wei, Directors' Ownership in the U.S. Mutual Fund Industry (August 2006). Available at SSRN: https://ssrn.com/abstract=713462 or http://dx.doi.org/10.2139/ssrn.713462

Qi Chen

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States
(919) 660-7753 (Phone)

Itay Goldstein

University of Pennsylvania - The Wharton School - Finance Department ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104
United States
215-746-0499 (Phone)

Wei Jiang (Contact Author)

Columbia Business School - Finance and Economics ( email )

3022 Broadway
New York, NY 10027
United States
(212) 854-5553 (Phone)

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