Shareholder Satisfaction with Overlapping Directors

Mutual fund shareholders are particularly supportive of “overlapping directors”—directors who serve simultaneously on a corporate board and a mutual fund board. Such support is observed on behalf of both connected funds (sharing a director with the company) and non-connected funds (not sharing a director with the company), and is particularly prominent when monitoring is needed. Our results suggest that the benefits offered by overlapping directors to all fund shareholders exceed the costs arising from their potential conflicts of interest, and that the benefits they offer are more valuable to mutual fund shareholders than to other types of shareholders.