Are Directors Necessary? The Case Of S&P 500 Index Mutual Funds
The authors provide new evidence linking board characteristics and performance, using S&P 500 index mutual funds. First, funds with higher percentages of board directors who are sponsor officers experience higher returns and lower expenses. Second, in general returns and expense ratios are not impacted by board size, the proportion of independent directors, or the presence of an independent chair. Third, when they segment the sample into private and public sponsorship they find that mutual fund board characteristics do matter for public ownership sponsored funds, suggesting sponsor ownership status plays an important role in defining agency costs.