tailieunhanh - Directors’ Ownership in the U.S. Mutual Fund Industry

There are also specific problems with the financing mechanisms which need to be overcome. Governments can also encourage pension funds to invest in green projects by helping to provide appropriate investment vehicles. To attract institutional investment into green projects governments have to structure projects as attractive investment opportunities for investors, providing risk return profiles that match the expectations of investors when considering such assets. What appears to be a common problem is the mismatch between the desired risk/return profiles of pension funds when investing in infrastructure – including green projects - and the opportunities offered in the. | THE JOURNAL OF FINANCE VOL. LXIII NO. 6 DECEMBER 2008 Directors Ownership in the . Mutual Fund Industry QI CHEN ITAY GOLDSTEIN and WEI JIANG ABSTRACT This paper empirically investigates directors ownership in the mutual fund industry. Our results show that contrary to anecdotal evidence a significant portion of directors hold shares in the funds they oversee. Ownership patterns are broadly consistent with an optimal contracting equilibrium. That is ownership is positively and significantly correlated with most variables that are predicted to indicate greater value from directors monitoring. For example directors ownership is more prevalent in actively managed funds and in funds with lower institutional ownership. We also show considerable heterogeneity in ownership across fund families suggesting family-wide policies play an important role. About half of all households in the United States invest in open-end mutual funds. When buying shares in a mutual fund investors delegate the management of their investment to fund managers or advisers hoping to benefit from their skills and experience in large-scale portfolio management. As in all principal-agent settings conflicts of interest may emerge between the principal in this case fund investors and the agent in this case fund managers with the agent taking actions that may go against the interests of the principal. Examples of investor-manager conflicts in mutual funds are provided by Mahoney 2004 and Tkac 2004 . They range from issues of effort allocation to cases of fraudulent behavior such as the market timing and late trading charges that surfaced in 2003. Qi Chen is from the Fuqua School of Business Duke University Itay Goldstein is from the Wharton School University of Pennsylvania and Wei Jiang is from the Graduate School of Business Columbia University. We thank Michael Bradley Susan Christoffersen Deborah DeMott Franklin Edwards Simon Gervais Ron Gilson Cam Harvey Laurie Hodrick Ron Kaniel Jennifer Ma David