Mutual fund performance, management teams, and boards

John C. Adams, Takeshi Nishikawa and Ramesh Rao ()

Journal of Banking & Finance, 2018, vol. 92, issue C, 358-368

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 (search for similar items in EconPapers)
JEL-codes: G20 G32 G34 L23 M11 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:92:y:2018:i:c:p:358-368

DOI: 10.1016/j.jbankfin.2016.09.006

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