The agency problem and the management of closed-end funds: managerialism and its impact on expense ratios.: An article from: Journal of Managerial Issues

by Matthew A. Walker

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This digital document is an article from Journal of Managerial Issues, published by Pittsburg State University - Department of Economics on December 22, 1997. The length of the article is 5209 words. The page length shown above is based on a typical 300-word page. The article is delivered in HTML format and is available in your Amazon.com Digital Locker immediately after purchase. You can view it with any web browser.

From the author: Closed-end funds, and their tendency to sell at a discount from net asset value, have been studied for the last two decades or so. Previous studies have had various levels of success in explaining why the discount should exist. The ratio of annual expenses to average net assets is one of the variables that has been shown to affect discounts. This study provides an important link between fund expense ratios and two measures of the extent of the agency problem that are prevalent in funds' management structures: supermajority voting rules and staggered voting for directors. Its purpose is to relate managerialism to fund expense ratios, and not to explain the tendency for discounts. The agency factors are shown to be useful in explaining expense ratios, especially for bond funds, and the effect remains after controlling for other factors that influence expense ratios. The results are consistent with the "management entrenchment" hypothesis which claims that entrenched managers may extract benefits from the corporation at the expense of shareholders.

Citation Details
Title: The agency problem and the management of closed-end funds: managerialism and its impact on expense ratios.
Author: Matthew A. Walker
Publication: Journal of Managerial Issues (Refereed)
Date: December 22, 1997
Publisher: Pittsburg State University - Department of Economics
Volume: v9 Issue: n4 Page: p485(12)

Distributed by Thomson Gale

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