Journal
JOURNAL OF BANKING & FINANCE
Volume 92, Issue -, Pages 358-368Publisher
ELSEVIER SCIENCE BV
DOI: 10.1016/j.jbankfin.2016.09.006
Keywords
Mutual funds; Board structure; Organizational structure; Management teams
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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. (C) 2016 Elsevier B.V. All rights reserved.
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