Boards of Directors and Operational Performance

44 Pages Posted: 8 Nov 2007

See all articles by John C. Adams

John C. Adams

University of Texas at Arlington

Takeshi Nishikawa

University of Colorado at Denver

Date Written: September 20, 2007

Abstract

We provide new evidence linking board characteristics and performance. We employ a sample of S&P 500 index funds to isolate the operational component of performance, thereby minimizing investment policy effects in our performance measures. Funds with higher percentages of board directors who are sponsor officers (insiders) experience higher returns and lower expenses. In the overall sample returns and expense ratios are not impacted by board size, the proportion of independent directors, or the presence of an independent chair. However, the presence of an independent chair is positively related to performance in funds where shares of the sponsoring investment firm are publicly traded. Overall, our results indicate current and recently proposed regulatory changes in board structure rules will impose dead weight costs on some shareholders and may even result in significantly lower performance.

Keywords: mutual funds, board structure, ownership structure

JEL Classification: G34, G32, G38, G20

Suggested Citation

Adams, John C. and Nishikawa, Takeshi, Boards of Directors and Operational Performance (September 20, 2007). Available at SSRN: https://ssrn.com/abstract=1017035 or http://dx.doi.org/10.2139/ssrn.1017035

John C. Adams (Contact Author)

University of Texas at Arlington ( email )

Box 19449 UTA
Arlington, TX 76019
United States
904-476-2946 (Phone)

Takeshi Nishikawa

University of Colorado at Denver ( email )

Box 173364
1250 14th Street
Denver, CO 80217
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
77
Abstract Views
473
rank
62,644
PlumX Metrics