Should We Trust Fund Managers? A Close Look at the Canadian Mutual Fund Governance

International Corporate Governance and Regulation

ISBN: 978-1-78756-536-4, eISBN: 978-1-78756-535-7

ISSN: 1569-3732

Publication date: 1 November 2018


The Canadian mutual fund setting is unique in that two governance mechanisms – corporate and trust – coexist. This study empirically examines the impact of each mechanism on fund fees and performance. We find that corporate class funds charge higher fees but deliver superior fee-adjusted returns than trust funds. We then analyze the impact of various board characteristics on fees and performance for corporate class funds. We find that a board with smaller size, CEO duality, and a higher percentage of independent directors is more likely to charge lower fees. In addition, smaller boards are strongly associated with higher fee-adjusted performance. Our study supports agency theory over stewardship theory and provides valuable guidelines for Canadian investors and regulatory agencies.




He and Trabelsi acknowledge generous support from the Social Sciences and Humanities Research Council of Canada (SSHRC). All errors are solely the authors’ responsibility.


He, Z., Kusy, M., Singh, D. and Trabelsi, S. (2018), "Should We Trust Fund Managers? A Close Look at the Canadian Mutual Fund Governance", International Corporate Governance and Regulation (Advances in Financial Economics, Vol. 20), Emerald Publishing Limited, pp. 105-130.

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