Director Ownership and Fund Value: Evidence from Open-End and Closed-End Funds

40 Pages Posted: 15 Feb 2007

See all articles by Linying Zhao

Linying Zhao

Columbia University, Graduate School of Arts and Sciences, Department of Economics

Date Written: February 2007

Abstract

Using data around the first-time disclosure of director ownership in the funds they oversee, I provide empirical evidence from U.S. open-end and closed-end funds that investors value directors' ownership as their commitments to diligent monitoring. That is, flows into open-end funds, and discount shrinkage in closed-end funds, in the first month after disclosure are positively related to director ownership. I also find that investors put a higher weight on ownership by directors, particularly disinterested ones, in the funds where directors' monitoring is potentially more important. This finding has implication for corporate governance that directors' ownership helps bring out better governance and contributes to corporate value.

Suggested Citation

Zhao, Linying, Director Ownership and Fund Value: Evidence from Open-End and Closed-End Funds (February 2007). Available at SSRN: https://ssrn.com/abstract=963047 or http://dx.doi.org/10.2139/ssrn.963047

Linying Zhao (Contact Author)

Columbia University, Graduate School of Arts and Sciences, Department of Economics ( email )

420 W. 118th Street
New York, NY 10027
United States

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