Melissa B. Frye

Do Female Mutual Fund Managers Manage Differently

We examine the performance and investment behavior of female fixed-income mutual fund managers compared with male fixed-income mutual fund managers. We find that male- and female-managed funds do not differ significantly in terms of performance, risk, and other fund characteristics. Our results suggest that differences in investment behavior often attributed to gender may be related to investment knowledge and wealth constraints. Despite the similarities between male and female managers, we find evidence that gender influences the decision making of mutual fund investors. We find that the net asset flows into funds managed by females are lower than for males, especially for the managers initial year managing the fund. 2003 The Southern Finance Association and the Southwestern Finance Association.

Executive Compensation in Socially Responsible Firms

This study examines chief executive officer (CEO) compensation and turnover in socially responsible (SR) firms. We compare characteristics of SR firms with a matched sample of firms based on industry and size. Analysis of CEO compensation indicates that the link between CEO pay and firm performance is weaker for SR firms than for non-SR firms. CEO turnover tests indicate that SR firms are more likely to experience CEO turnover following poor performance. Stock option grants to CEOs of SR firms do not appear to result in future risk-taking behaviour, whereas such grants are significantly related to future risk at non-SR firms. Copyright (c) 2006 The Authors; Journal compilation (c) 2006 Blackwell Publishing Ltd.

Boards, Uncertainty, and the Use of Fairness Opinions

Manuscript Type: Empirical Research Question/Issue: We propose and test a new perspective on why the boards of some acquiring firms purchase a fairness opinion (FO). Specifically, we examine whether the board’s knowledge explains the use of a FO and the market reaction to the FO. Research Findings/Insights: We find that FOs are more likely to be purchased when the acquiring firm’s board feels uncertain about the deal Specifically, we find that boards with more outside directors are more likely to use a FO, while boards whose directors hold more outside appointments (busy boards) are less likely to seek a FO. Moreover, we find that although the market reacts negatively to the FO, board characteristics both moderate and exacerbate the reaction. When a FO is used by a busy board, the market reacts more negatively to the merger announcement. In contrast, board independence and the average service years for directors seem to moderate the market’s reaction to the FO. Theoretical/Academic Implications: The results of this study are consistent with the idea that a lack of knowledge and underlying transaction uncertainty motivates the board to purchase a FO. In addition, our empirical evidence supports a sophisticated market reaction, where the market recognizes the board’s knowledge when assessing the necessity of the FO.Practitioner/Policy Implications: This study provides a new perspective on why boards use FOs. A board with more outside directors may be strong on monitoring, but may lack knowledge on the deal. This essentially provides an example of a cost associated with an independent board. Further, we show that the market can differentiate the types of board that use a FO.