Mutual funds attracted great attention of both shareholders and academics in last few decades. Mutual funds provide benefits like diversification, professional managements and reduced costs for individual shareholders. Shareholders invest their assets into mutual funds managed by professionals. Managers may have an incentive to use those assets to satisfy their own interests. They can achieve this by charging excessive fees or spending more on the perquisites. These unmatched interests of shareholders and managers create so called principal-agent conflicts. Some researchers argue that market competition in mutual funds industry is strong enough to align interests of both shareholders and managers, thus mitigating principal-agent conflicts. Others believe there is need for internal governance to monitor managers‟ behaviors. Board of directors as an internal governance mechanism is responsible for aligning shareholders and managers interests.We collected data on board characteristics to find if they are related to funds attributes. Our sample of funds consists of 68 fund management companies with total of 603 mutual funds managed by those companies. Board characteristics include board size, age and gender of board members, and presence of CEO on the board. Fund attributes are total expense ratio, rate of return and management fees used as a measure of board effectiveness. We analyzed relationship of board characteristics and fund attributes separately on the company level and fund level.On the company level we found no relationship between board size and board age with expense ratio and rate of returns. We found significant positive relationship between board gender and presence of CEO with expense ratio. These results indicate that with the increase of male members on the board and the presence of CEO on the board there is an increase in total expense ratio. On the fund level analysis we found different relations with various types of funds. This may indicate that depending on the type of the fund the structure of the board that is effective changes.

abstract: I examine the determinants and implications of the level of director monitoring. I use the distance between directors' domiciles and firm headquarters as a proxy for the level of monitoring and the introduction of a new airline route between director domicile and firm HQ as an exogenous shock to the level of monitoring. I find a strong relation between distance and both board meeting attendance and director membership on strategic versus monitoring committees. Increased monitoring, as measured by a reduction in effective distance, by way of addition of a direct flight, is associated with a 3% reduction in firm value. A reduction in effective distance is also associated with less risk-taking, lower stock return volatility, lower accounting return volatility, lower R&D; spending, fewer acquisitions, and fewer patents. / Dissertation/Thesis / Ph.D. Business Administration 2014

This dissertation consists of two essays: one looks at the relation between firm focus and hedging in the REIT industry, and the other compares bank board structures in China and the US. The first essay presented in Chapter 2 examines the relation between corporate hedging and firm focus in the REIT industry by using a sample of REITs in 2005 and in 2007. We find 46.41% utilization rate in 2005 and 43.41% in 2007. Consistent with our hypothesis, we find that, relative to diversified firms, focused firms are more likely to engage in hedging. Focused firms also tend to be involved in greater amount of hedging. We also document a negative relation between hedging and transparency, although the evidence is not overwhelming. Consistent with previous literature, there is a strong firm size effect. The second essay presented in Chapter 3 examines the relation between bank performance and board structure by using a sample of 74 US banks and 53 Chinese banks for the period 2002 to 2006. Indeed, the empirical relation between board structure and performance is virtually non-existing in China. In particular, for the US sample, the board size is found to be significantly and negatively correlated with ROA, but a larger board also tends to be associated with lower costs. For Chinese banks, the evidence indicates that governance variables are not significantly correlated with performances with the exception of block ownership: there is strong evidence that the relation between block ownership and bank performance is negative. Additionally, we find substantial differences in board structure between the two countries; in particular the average board size and the proportion of outside directors for US banks are almost twice of those in China.

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yes / This paper examines the relationship between board structure and corporate risk taking in the UK financial sector. We show how the board size, board independence and combining the role of CEO and chairperson in boards may affect corporate risk taking in financial firms. Our sample is based on a panel dataset of all publicly listed firms in the UK financial sector, which includes banks, insurance, real estate and financial services companies over a ten year period (2003-2012). After controlling for the effects of endogeneity through the application of the dynamic panel generalized method of moments estimator, the findings of this study suggest that the presence of non-executive directors and powerful CEOs in corporate boards reduces corporate risk taking practices in financial firms. The negative relationship can be explained within the agency theory context, where managers are regarded as more risk averse because of the reputational and employment risk. An increased power concentration is therefore expected to enhance the risk aversion behaviour of directors. The findings however, do not show any significant effect of board size on corporate risk taking in financial firms. As this study covers recommendations of the UK Corporate Governance Code on the role of corporate boards in managing firms’ risk, the empirical evidence could be useful for corporate governance regulation and policy making.

The well documented agency problem remains an ongoing debate, with the board as a central point of corporate governance providing a control mechanism. The effective composition and functioning of the board is therefore highlighted as being key to overcoming agency‐problems (Hermalin and Weisback, 2003; Adams and Ferreira, 2009). This research report explores the relationship between the structural aspects of the board, including the average age of board members, the size of the board of directors and the specific positions women and ethnic persons hold on the board of South African listed companies, and intellectual capital performance measured using VAIC™ (Pulic, 2000), as well as market adjusted share returns. The population consists of all South African companies listed on the JSE Securities Exchange during 2011 with the final sample consisting of 193 companies after transformation of the data. The results of the regression analyses indicated no significant relationship between intellectual capital performance and board size, or specific positions being held by women or ethnic persons. A significant positive relationship however exists between the average age of the board of directors and intellectual capital performance. As a result, companies may be able to enhance their intellectual capital performance by increasing the average age of their board members. Key words: Board structure, Diversity, Ethnic, Gender, Age, Board size, Intellectual capital, Performance, South Africa.

Corporate governance (CG) is the set of rules and regulations through which organisations account to their stakeholders. An effective CG system promoting the efficient use of organisational resources is instrumental in the economic growth of a country. Based on the existing literature, this research identifies board structural features i.e., 'Board Independence', 'CEO Duality', 'Board Diversity', 'Number of Board Committees' and 'Audit Committee Independence' as key variables of an effective CG system. Previous studies have largely examined the direct relationship between CG systems and firm performance. This research develops a multi-theoretical model that links the Board structural characteristics with firm performance measured in Tobin's Q, Return on Assets and Return on Equity, via two crucial mediating variables, 'Board Size' and the 'Frequency of Board Meetings', and two additional moderating variables, 'Code of Corporate Governance' and 'Ownership Concentration'. The conceptual model that is developed is tested with the help of an econometric study based on a comprehensive set of balanced panel data of 265 companies listed on the Karachi Stock Exchange for a period of six years. The first panel (2009-2011) represents the time-period before the implementation of the revised Code, and the second panel (2013-2015) covers the time-period following the implementation of the revised Code. The results show that the Number of Board Committees (discussing strategic issues) is significantly related to performance and the 'Size of Board' significantly mediates the relationship between the number of board committees and performance. The relationship is also moderated by the Code of Corporate Governance and ownership concentration held by the largest shareholder. The results also show that the links between additional Board structural variables (board independence, CEO duality, board diversity and audit committee independence) and the financial performance are positive but not significant to draw conclusive result. Comparison between pre-and post-implementation of the revised Code of CG suggests that the intervening relationship between the board variables and the performance is stronger after the implementation of the revised Code. This research is a significant milestone in the country context of Pakistan that reflects the socio-economic set of several emerging economies. A key implication of this research is that the corporate sector in Pakistan needs to move away from the tick-box culture of CG. The sector needs to implement CG as a tool to mitigate business risks, appoint and empower non-executive directors to achieve an effective monitoring of management. The companies also need to establish their own ethical and governance principles applicable to the Board of Directors in order to deal with factors that are likely to reduce Directors' efficiency. The research offers new insights and conceptual framework for further research in this area.

Agency theory proposes that the role of the board of directors is to control management (Fama & Jensen 1983). A structurally independent board, one with a high percentage of non-executive directors and a chairperson who is not the CEO, has been used as a proxy for the control role. Therefore, agency theory predicts a positive relationship between independent board structure and firm performance. These predictions have not been confirmed by meta-analytic reviews (Dalton, Daily, Ellstrand, & Johnson 1998; Rhoades, Rechner, & Sundaramurthy 2000). This thesis applies structural contingency theory to provide an alternative explanation for the relationship between board structure and firm performance. Structural contingency theory (Donaldson 2001) proposes that the relationship between an organization???s structure and its performance is moderated by contingencies. In this study the contingency is the salience of the board???s control role. I argue that structural independence of the board has a beneficial effect on performance only if it is in fit with control salience. For example, a firm with an independently structured board that gives high prominence to the control role will perform well. On the other hand, another firm with a less independently structured board that does not see its main role as controlling management will also prosper. Survey data were analyzed to measure the control salience for 98 Australian listed companies. Archival data provided measures of board structure and firm performance. Consistent with the meta-analytic reviews, there was no association between independent board structure and firm performance. There was some evidence that high control salience resulted in high performance, but this effect was evident chiefly when performance was measured by total shareholder returns. This may indicate that the share market was responding to the symbolism of high control salience. In contrast to the symbolic main effect of control salience, the fit between the control salience and the independent structure of the board caused increased return on equity. This reflects the board???s objective effect on profit when its structure is in fit with control salience.

The first essay examines how board structure affects manager dismissal decisions in mutual funds. We first find some evidence suggesting that the likelihood of managerial replacement is higher when fund boards are more independent and receive lower levels of compensation. Manager turnover is more likely when funds underperform the objective average. We then investigate the manager turnover decision conditional on the funds experiencing a merger. We find that funds with more independent boards are more likely to employ target managers with a track record of superior performance. Overall, these results suggest that more independent boards make manager retention/replacement decisions in the interests of their shareholders. The second essay studies the relationship between managerial ownership and mutual fund performance. We first document that almost half of the mutual fund managers own shares in their funds, though the absolute amount of investment is modest. Fund future performance is positively related to the level of manager ownership. Manager ownership is higher in equity funds than bond funds, in funds with better past performance, smaller sizes, and where managers have been in charge for a longer time period. When we decompose manager ownership into predicted and residual parts, we find that both components are significant in explaining fund future performance. Our findings suggest that managerial ownership has desirable incentive attributes for mutual fund investors. The third essay investigates how managerial ownership affects the investment behavior of portfolio managers. We first examine the disposition effect exhibited by different fund managers, and find that those with positive ownership show significantly less disposition effect. Specifically, they sell losers faster and hold on to winner stocks for a longer period. Disposition effect is less pronounced in bigger funds, funds with smaller boards, and funds with higher percentage of board independence. We then test the relation between managerial ownership and the tournament behavior, investigating how the degree of managers manipulation of fund volatilities in the latter part of a year is related to their personal stakes in the funds. However, we do not find evidence suggesting the existence of such a relationship.

English Abstract Drawing on agency theory and the institutional perspective, this paper aims to examine the relationship between corporate governance and cash holdings for the business group-affiliated firms listed on the Taiwan Stock Exchange and in the Over-The-Counter market. The empirical results reveal that the group-affiliated firms hold more cash than non-affiliated firms. The findings show that the entrenched business group effects dominate the institutional network group¡¦s effects and indicate that the presence of a pyramidal group ownership structure in the group-affiliated firms leads to a principal-principal conflict and therefore an increase in agency problems. To avoid the confounding effect by which the different corporate governance mechanisms would lead to different predictions regarding corporate governance effectiveness, this paper constructs a corporate governance index by aggregating the six characteristics related to corporate governance effectiveness: the cash flow rights, the control-cash flow rights deviation, the control-affiliated directors, the control-affiliated supervisors, board independence, and the ITDRS rankings. The results show that good governance mechanisms are effective in mitigating the principal-principal agency costs and moderating the effect of group affiliation in affiliated firms¡¦ cash holdings. Keywords: Business Group-Affiliated Firms, Cash Holdings, Corporate Governance, Board Structure, Group Diversity