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  • We thank Gerald Gay (the editor), an anonymous referee, Renee Adams, Keith Brown, Sean Collins, Ann Gillette, John Griffin, Jay Hartzell, Eric Higgins, John Hund, Bob Parrino, Shisheng Qu, Laura Starks, Sheridan Titman, Kelsey Wei, Fei Xie, Hong Yan, and seminar and conference participants at University of Texas at Austin, Kansas State University, Western Washington University, CCRG SEC Financial Reporting and Governance Conference, Eastern Finance Association annual meeting, Vanderbilt University Conference on Conflicts of Interest in Financial Markets, and Financial Intermediation Research Society (FIRS) conference in Shanghai for helpful discussions and useful comments. We also thank the Eastern Finance Association for the Best Paper in Financial Intermediation Award. Part of the work was done when Tang was at Kennesaw State University.


A unique governance structure for mutual funds is unitary board—one board overseeing all funds in the entire family. We find strong evidence for unitary board as an effective governance mechanism. Funds with unitary boards are associated with lower fees, are more likely to pass the economies of scale benefits to investors, are less likely to be involved in trading scandals, and rank higher on stewardship. In contrast, funds with larger or more independent boards charge higher fees and rank lower on stewardship. Our findings indicate that unitary boards of small size, rather than independent boards, may be more beneficial to fund shareholders.