Are multiple share class funds poorly governed?

Authors

  • Jonathan Handy Department of Business and Accounting, Furman University
  • Thomas Smythe Lutgert College of Business, Florida Gulf Coast University

DOI:

https://doi.org/10.61190/fsr.v28i1.3415

Keywords:

Investor protection, Shareholders, Corporate governance, SEC, Mutual fund

Abstract

Utilizing independent Morningstar Stewardship Grades, this article finds that multiple share class mutual funds (MS funds) have lower quality governance. Ordered probit regressions indicate MS funds are more likely to have lower board quality ratings and managerial incentive ratings, additional evidence the MS structure has not provided the benefits initially put forth by supporters. The results continue to demonstrate that less sophisticated investors seeking financial advice (those typically utilizing MS funds) may potentially be directed to funds that underperform and have higher costs.

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Published

2020-03-30

How to Cite

Handy, J., & Smythe, T. (2020). Are multiple share class funds poorly governed?. Financial Services Review, 28(1), 49–65. https://doi.org/10.61190/fsr.v28i1.3415

Issue

Vol. 28 No. 1 (2020): Spring 2020

Section

New Original Submission

License

Copyright (c) 2019 Academy of Financial Services

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