Title: Ownership concentration and fund performance in conventional and Shariah Malaysian mutual funds

Authors: Sofi Mohd Fikri

Addresses: Department of Islamic Finance and Islamic Economics, Islamic Business School, Universiti Utara Malaysia, 06010 UUM Sintok, Kedah, Malaysia

Abstract: This study investigates the ownership concentration comprises managerial ownership, director ownership, and institutional ownership between Conventional and Shariah mutual fund (SMF) toward enhancing fund performance by employing the traditional method of considering a non-linear causal relationship. Overall, the results support the notion of a non-linear relation between managerial ownership and fund performance. Although the ownership by managers is more concentrated and significantly different in SMF, the positive relation is more pronounced in conventional fund. More importantly, the relation remains strong non-linear significantly and jointly determined by fund performance in a two-way relationship when endogeneity, simultaneity, and heterogeneity unobserved issues are considered. The study also finds that institutional ownership with conflicting interest in mutual fund signals negative effect on fund performance. The findings suggest that ownership by managers plays an effective role of agency control and value-enhancing at certain depth of concentration to align the interest between managers and shareholders.

Keywords: ownership concentration; managerial ownership; mutual fund; Shariah mutual fund; fund performance.

DOI: 10.1504/IJMEF.2019.104672

International Journal of Monetary Economics and Finance, 2019 Vol.12 No.6, pp.467 - 497

Received: 07 Nov 2018
Accepted: 24 Jul 2019
Published online: 27 Jan 2020 *

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