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Board Holdings, Compensation and Mutual Fund Manager Turnover

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Abstract

This paper examines the relationship between board holdings, compensation and the turnover of underperforming mutual fund managers. Previous studies find that some fund managers consistently underperform their peers over long periods of time. The presence of these consistent underperforming funds might be partially explained by ineffective monitoring whereby board interests are not aligned with those of shareholders. Based on 2003 data collected from 606 mutual funds, our results provide evidence that underperforming fund managers have a lower probability of being replaced when their boards have lower holdings and higher compensation.

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Authors and Affiliations

  1. College of Business and Economics, California State University East Bay, Hayward, CA, 94542, USA

    Eric Fricke

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  1. Eric Fricke
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Correspondence to Eric Fricke.

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Fricke, E. Board Holdings, Compensation and Mutual Fund Manager Turnover. J Financ Serv Res 47, 295–312 (2015). https://doi.org/10.1007/s10693-014-0196-4

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  • DOI: https://doi.org/10.1007/s10693-014-0196-4

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