Agency Costs, Governance, and Organizational Forms: Evidence from the Mutual Fund Industry

47 Pages Posted: 16 Mar 2007

See all articles by Stephen P. Ferris

Stephen P. Ferris

University of Missouri at Columbia - Department of Finance

Xuemin Sterling Yan

University of Missouri - Columbia

Date Written: February 2007

Abstract

Using a comprehensive sample of mutual funds and fund families for the period 1992-2004, this paper examines the impact of fund management companies' organizational forms on the level of agency costs observed within mutual funds. We find that, all else being equal, (1) funds managed by public fund families charge higher fees than those managed by private fund families; (2) public fund families are more likely to be implicated in the recent fund scandals; (3) public fund families acquire more funds than private fund families; and (4) funds of public fund families significantly underperform funds of private fund families. Collectively, these findings suggest that agency costs are higher in mutual funds managed by public fund families. Our results are consistent with the idea that the agency conflict between the fund management company and fund shareholders is more acute for public management companies because of their shorter-term focus.

Keywords: Organizational form, Mutual funds, Agency costs, Governance

JEL Classification: G23, G30, G34

Suggested Citation

Ferris, Stephen P. and Yan, Xuemin Sterling, Agency Costs, Governance, and Organizational Forms: Evidence from the Mutual Fund Industry (February 2007). Available at SSRN: https://ssrn.com/abstract=970547 or http://dx.doi.org/10.2139/ssrn.970547

Stephen P. Ferris

University of Missouri at Columbia - Department of Finance ( email )

214 Middlebush Hall
Columbia, MO 65211
United States
573-882-6272 (Phone)
573-884-6296 (Fax)

Xuemin Sterling Yan (Contact Author)

University of Missouri - Columbia ( email )

Robert J. Trulaske Sr. College of Business
427 Cornell Hall
Columbia, MO 65211-2600
United States
573-884-9708 (Phone)
573-884-6296 (Fax)

HOME PAGE: http://business.missouri.edu/yanx/

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

Paper statistics

Downloads
206
Abstract Views
1,180
rank
179,683
PlumX Metrics