| Title: |
Impact of fiduciary duty on management fees: Evidence from Malaysia. |
| Authors: |
Mei Foong Wong1 wongmf@tarc.edu.my, Kok Khai Lee1 emxts0413@gmail.com, Wei Hong Liew1 liewwaihong60@gmail.com, Kang Wan Tan1 kangwan93tan@gmail.com |
| Source: |
Global Business & Management Research. 2024 Special Issue, Vol. 16, p1873-1885. 13p. |
| Subject Terms: |
*Fiduciary responsibility, *Trusts & trustees, *Bank service charges, *Corporation law, *COVID-19 pandemic, *Investor protection |
| Abstract: |
Purpose: This study aims to determine whether fiduciary duties have an effect on firm insiders' actions and management fees. Insiders are subject to more stringent fiduciary obligations under trust law than under corporate law. This study examines whether the difference in fiduciary duties affects agency conflict and management fees. Design/methodology/approach: This research uses difference-in-difference-in-differences (DDD) strategy to compare banks and insurance companies that are organized as corporations and trusts, respectively in Malaysia. The coexistence of these two organizational systems provide a unique testing ground for the analysis of fiduciary duties. Findings: Insurance companies organized in trust form incur lower management fees than banks which are organized in corporate form. Evidence also indicated that, even after adjusted for differences in family control and impact of the post Covid-19 pandemic, insurance companies tend to outperform the banks. Moreover, larger firm size exhibited higher management fees due to increase in operational complexity and resource requirements, while older aged firm and passively managed fund justify lower management fees. Research limitations/implications: The findings are significant for corporate governance design because they suggesting that tighter fiduciary duties can improve investor protection by reducing agency conflict and managerial risk-taking, as well as improve the risk-adjusted performance. Practical implications: The findings of this study will provide valuable insights for regulators, market participants, and industry practitioners in evaluating the determinants of management fees and their alignment with fiduciary responsibilities in the Malaysian financial sector. Originality/value: Most of the literature on corporate governance and investor protection ignore organizational form. This study examines the heterogeneity between corporate and trust fiduciary duties and its impacts on management fees. [ABSTRACT FROM AUTHOR] |
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| Database: |
Business Source Complete |
