Internal Governance Mechanisms and Operational Performance: Evidence from Index Mutual Funds

We provide new evidence linking board characteristics and performance. Using manually collected governance data from the mutual fund industry, we find an inverse relation between board size and fund performance. We also find evidence that organizational form plays an important role in determining operational performance. Overall, the results are consistent with the notion that there may not be a single optimal board structure that is applicable to all funds, that attempts to regulate board attributes should be considered with caution, and that sponsor-level factors are important board structure considerations. The Author 2009. Published by Oxford University Press [on behalf of The Society for Financial Studies]. All rights reserved. For Permissions, please e-mail: journals.permissions@oxfordjournals.org., Oxford University Press.