Board structure, mergers, and shareholder wealth: a study of the mutual fund industry

Tufano, Peter, Khorana, Ajay and Wedge, Lei (2007) Board structure, mergers, and shareholder wealth: a study of the mutual fund industry. Journal of Financial Economics, 85 (2). pp. 571-598.

This is the latest version of this item.

Abstract

We study mutual fund mergers between 1999 and 2001 to understand the role and effectiveness of fund boards. Some fund mergers—typically across-family mergers—benefit target shareholders but are costly to target fund directors. Such mergers are more likely when funds underperform and their boards have a larger percentage of independent trustees, suggesting that more-independent boards tolerate less underperformance before initiating across-family mergers. This effect is most pronounced when all of the fund's directors are independent, not the 75% level of independence required by the SEC. Higher-paid target fund boards are less likely to approve across-family mergers that cause substantial reductions in their compensation.

Item Type: Article
Keywords: Mutual funds; Mergers; Governance
Date Deposited: 18 Sep 2018 14:40
Last Modified: 18 Sep 2018 14:40
URI: http://eureka.sbs.ox.ac.uk/id/eprint/6908

Available Versions of this Item

Actions (login required)

Edit View Edit View