The Effect of Board Structure on Egyptian Mutual Fund Performance: A Structural Equation Model Analysis

Purpose – This paper empirically explores the causality between board structure and the fund performance in the mutual fund industry of an emerging market. Design – Using a panel of 82 Egyptian funds spanning 10 years before and after the global financial crisis, we develop a Structural Equation Model to deal with the endogeneity between measures of governance and performance in a systematic and identified way. Findings – Experimental results show a significant negative relationship between the equity ownership by the directors and the fund performance. Evidence shows little support for a significant effect of board structure on the performance after controlling for the endogeneity. It implies the misconduct of governance rules in Egypt, especially the weakness in board composition. Originality– Given the important role of mutual fund industry in Egypt, this is the first study of its kind explores the causality between board structure and the fund performance in the mutual fund.


Introduction
Most studies on the nexus among performance, board structure and ownership structure are based on developed economies. Baysinger and Butler (1985) find that there is a positive relationship between the number of independent directors and performance in major US business corporations. Similarly, Khorana et al. (2007) also confirm this relationship in the US mutual fund industry. They distinguish three components of board composition: the executive component, the monitoring component, and the instrumental component. The executive component provides information and expertise necessary for corporate strategy and business policy. The monitoring component fulfils a policing function over management's performance and represents shareholders' interests. The instrumental component provides general knowledge, networking, and productive links between organizations. They conclude that inside directors provide the executive component; independent directors fulfil the monitoring component. Cochran et al. (1985) provide evidence to support this complementarity between the inside and outside/independent directors. Similarly, Rosenstein and Wyatt (1990) document positive abnormal returns when an outside director is appointed with more positive abnormal returns for impartial and financial outsiders compared to the appointment of corporate outsiders. Brickley et al. (1994) also support the independent director monitoring hypothesis and show that outsider-dominated boards accrue positive performance on the declaration of poison pill defences, among others (Yermack, 1996;Ding & Wermers, 2012). ( ), Yermack (1996, Eisenberg et al. (1998), Cheng (2008) and Guest (2009) all find a negative relationship, while Belkhir (2009), Ding and Wermers (2012) and Wintoki et al., 2012 find a positive relationship. Barnhart and Rosenstein (1998) show that the board composition, managerial ownership, and performance are endogenous. Brickley and James (1987) argue that there is a negative correlation between managerial consumption of perquisites and both proportion of independent directors and concentration of ownership. Similar conclusions are obtained by Mak and Li (2001). Recent evidence from Kryzanowski and Mohebshahedin (2016) also shows a positive relationship between directors' ownership and CEF returns of US closed-end funds (CEFs) during 1994-2013, where the generalized method of moments estimator is used to solve the endogeniety problem.
It has been gradually recognised that endogeneity exists widely in many corporate finance models (Agrawal & Knoeber, 1996;Cremers & Romano, 2011;Youssef et al., 2017;Sakr et al., 2017). The endogenous relationship between board structure and performance has received a special attention in the empirical literature (Durlauf & Quah, 1999;Asada et al., 1998;Wintoki et al., 2012). Evidence from developed countries with mature financial institutions shows that firms with stronger shareholder rights had higher firm value, higher profits, higher sales growth, lower capital expenditures, and made fewer corporate acquisitions, because the quality of fund governance is positively correlated to fund performance (Gompers et al., 2003). In particular, Cremers and Romano (2011) use difference-in-differences technique to examine the impact of the mutual fund voting disclosure regulation announced by the SEC in 2003. The endogeneity issue is handled by taking differences to purify the effect of the regime shift. In an earlier paper by Agrawal and Knoeber (1996), the potential endogeneity problem be-tween internal governance measures and performance is addressed by spelling out the agency problem between managers and shareholders. They find that the effect of insider shareholding disappears when the when a simultaneous systems framework is used.
Structural models have gradually gained its popularity in the corporate governance literature. For example, Dalton et al. (1999) builds a structural model to explain board composition. Lin (2005) studies the influences of the board of directors and large external shareholders on CEO compensation. Tam and Tan (2007) examine the relationship between ownership types and firm performance. Zhang (2010) employs a similar tool to examine how corporate boards can create a sustainable competitive advantage. Similar to Cremers and Romano (2011) and Agrawal and Knoeber (1996), the current paper examines the role of corporate governance in mutual fund performance allowing for endogenous board structure and ownership structure. This structural equation model (SEM) approach explicitly spells out the endogeneity among the three key variables, corporate governance, and ownership structure and fund performance. The advantage of the SEM approach over the so-called limited information approach (e.g. 2SLS, GMM, difference-in-differences) is that it is more statistically efficient in data use and it paints a more complete picture of how endogenous variables interact with each other in a sys-tem. More importantly, we provide a better identification strategy by a clearly defined structural model, compared to the reduced-form models which underlie the limited information approach.
In this paper, we attempt to answer four questions by a systematic and structural approach in the context of an emerging market, Egypt: • What are the determinants for the performance of mutual funds?
• What are the determinants for the board structure of mutual funds?
• What are the determinants for the ownership structure?
• Are these three questions inter-correlated?
The aim of this research is to improve a model to enhance the performance of mutual fund board of directors in the Egyptian Stock Market. To achieve the aim of this research, three research objectives are established. Objective one: to present a comprehensive literature review on mutual fund governance, and how it has become a very important issue for both developed and emerging countries. Objective two: to examine the ability of mutual funds mangers to fulfil excess returns, and build system-based model (SEM) to analyse the mutual causality among endogenous variables. Objective three: to provide a set of recommendations to improve the performance of mutual funds in the Egyptian Stock Market.
The rest of this paper is structured as follows: section 2 reviews the previous literature; section 3 discusses the research gaps section 4 discusses the empirical hypothesis on the relationship between mutual fund board structure and performance; section 5 discusses the research design including the econometric approach and data description ; section 6 lays out the structural equation modelling analysis. Finally, section 7 concludes, and it presents research contributions and suggestions for future studies.

Literature Review
In corporate governance research, there has been a slow but constant increase in the use of SEM (Dalton et al., 1999;Lin, 2005;Tam & Tan, 2007;and Zhang, 2010). For example, Dalton et al (1999) uses a structural equation model to measure board composition. Lin (2005) studies the influence of the board of directors and large external shareholders on controlling CEO compensation using SEM. Tam and Tan (2007) examine the relationship between ownership types and firm performance through SEM. Zhang (2010) employs SEM to examine how corporate boards can create a sustainable competitive advantage (Azim, 2012). Similar to Cremers and Romano (2011) and Agrawal and Knoeber (1996), this paper examines the role of corporate governance in mutual fund performance through investigating the effect of the board of directors on mutual fund performance, and the effect of ownership on mutual fund performance which will be illustrated below.
In agency theory, the corporate boards, assuming the power to look after the firm, involve in arm's length transaction with CEO and design such compensation plans which provide CEO with efficient incentives to maximize the shareholder value, and hence reduce moral hazard problem arising from separation of ownership from control. This predicts a positive link between CEO compensation and firm performance (Ibrahim et al., 2019). Baysinger and Butler (1985) suggest that there is a positive relationship between independent directors and performance. The results of Cochran et al. (1985) raise doubts about the theory that insider-dominated boards allow managers to consume higher levels of perquisites than do boards having other compositions. Similarly, Rosenstein and Wyatt (1990) document positive abnormal returns when an outside director is appointed with more positive abnormal returns for impartial and financial outsiders compared to the appointment of corporate outsiders. Brickley et al. (1994) also supports the independent director monitoring hypothesis and shows outside dominated boards accrue positive performance on the declaration of poison pill defences. On the contrary, Agrawal and Knoeber (1998) find that the proportion of outside directors have a negative impact on performance.
Furthermore, (e.g., Agrawal & Knoeber, 1996;Klein, 1998;Bhagat & Black, 2002) find a negative relationship between independent directors and firm performance. Additionally, (Hermalin & Weisbach, 1991;Mehran, 1995;and Ferris & Yan, 2007) find no relationship at all. On contrary, Yermack (1996), and Ding and Wermers (2012) find a positive relationship. Due to the lack of experience of most of the independent directors, Adams et al. (2009) find that firms that suffer from essential financial problems during the 2008-2009 crisis, had more independent directors than others.
Additionally, (e.g., Agrawal & Knoeber 1998, Yermack, 1996Eisenberg et al., 1998;Cheng, 2008;and Guest, 2009) find a negative relationship between firm performance and board size. On contrary, Belkhir (2009) and Ding and Wermers (2012) find a positive relationship between firm performance and board size (Wintoki et al., 2012). Barnhart and Rosenstein (1998) find that the variables of board composition, managerial ownership, and performance are simultaneously determined. Recent empirical work supports the monitoring hypothesis for board of directors. Brickley and James (1987) find that there is a negative correlation between managerial consumption of perquisites and both proportion of independent directors and concentration of ownership. Similarly, Mak and Li (2001) find that there is a negative correlation between the proportion of independent directors and both board size and managerial ownership. Recent evidence of Kryzanowski and Mohebshahedin (2016) finds that there is a positive relationship between directors' ownership and CEF returns of U.S. closed-end funds (CEFs) during 1994-2013, using a dynamic panel two-step system generalized method of moment's estimator to solve the endogeniety problem.
Corporate governance for emerging economies is a topic of vital importance (Patel, 2019

Research Gaps
A large body of empirical research on corporate finance suggests that governance structures improve performance, but this research has serious issues with endogeneity (Wintoki et al., 2012). However, the implications for the empirical work will be usefulness if it does not deal with endogeneity problem, because the results will be biased and cannot be dependable (Roberts & Whited, 2012).
The first method (2SLS/3SLS) requires finding an Instrumental Variable (IV). The solution to such problem is to change the way we estimate β to make it identifiable. For this, we should have an "instrument", a variable which we can refer to as z. There are two conditions that should be satisfied about z to consider it a valid instrument: 1) z must be uncorrelated with ε: E(ε z) = 0.
2) z must be correlated to x, and preferably, this correlation will be as high as possible: E(z x) ≠ 0.
We can use lagged variable as (IV Although, GMM and ML is a general framework for deriving estimators, there is a difference between the assumptions of the two methods. ML estimators use assumptions about the specific families of distributions for the random variables to derive an objective function. '； 8It selects the parameters that are probably have generated the observed data, which can be proceeded by maximizing an objective function. GMM estimators use assumptions about the moments of the random variables to derive an objective function. The assumed moments of the random variables present population moment conditions, which can be achieved by minimizing an objective function. Accordingly, ML can be more efficient than GMM, because ML uses the entire distribution instead of uses specified moments only (Breitung & Lechner, 1995).
The second method is (SEM) which is a multivariate technique that allows us to estimate a system of equations. Structural Equation Models are often drawn as Path Diagrams. Different likelihood values can be obtained when fitting the same model with SEM and GSEM because the normality of observed exogenous variables is never assumed with GSEM. SEM is a Full Information Maximum Likelihood (FIML) which estimates all the equations and all the unknown parameters jointly.
A variety of corporate governance mechanisms has been previously investigated by using various analytical techniques except SEM (e.g. Boo & Sharma, 2008;Coles et al., 2001;Fernández & Arrondo, 2005;and Ward et al., 2009). Therefore, the existence of endogeneity is the enormous restriction of these studies (Schultz et al., 2010). Therefore, to achieve the research objectives empirically, this paper depends on Structural Equation Modeling (SEM) which is a stringent statistical technique to solve the endogeneity problem (Hox & Bechger, 1998;Azim, 2012). Furthermore, SEM is a Full Information Maximum Likelihood (FIML) that estimates all the equations and all the unknown parameters jointly and obtains robust findings compared with (2SLS/3SLS) which is a Limited Information Maximum Likelihood (LIML) that estimates a single structural equation at a time.
Therefore, this paper utilizes SEM which is a multivariate technique that allows us to estimate a system of equations. Structural Equation Models are often drawn as Path Diagrams. SEM is a Full Information Maximum Likelihood (FIML), which estimates all the equations and all the unknown parameters jointly and obtains robust findings, compared with GMM.

Research Hypotheses
This paper expands the existing fund governance literature by exploring the impact of the board of directors on mutual fund performance. The objective aim of this study is to improve a model to enhance the performance of mutual fund board of directors in the Egyptian Stock Market. In particular, to examine the ability of mutual funds mangers to fulfil excess returns using system-based model (SEM).
correlation between board size and performance, because larger board of directors needs more settlements to avoid conflicts, which might lead to harm firm value. Similarly, Conyon and Peck (1998) argue that board size has negative impact on firm performance in a number of European firms. Eisenberg et al. (1998) and Guest (2009) suggest that there is a significant inverse relationship between board size and profitability, because poor communication might lead to difficulty in decision-making process which restricts the influence of large board of directors. In contrast, Belkhir (2009) finds that there is a positive association between board size and performance in banking sector; this might be due to that board of directors has the ability to get rid of the poor performing managers. Similarly, Dalton et al. (1999) finds a positive correlation between board size and performance.
H1: There is a positive relationship between board size and fund performance ( ).
Proportion of independent directors and inside directors: the two ways inside outside director classification is used to measure the proportion of inside directors on the board, and the proportion of outside directors on the board. Ding and Wermers (2012) demonstrate that independent directors have a significant influence on pre-expense performance. In contrast, Ferris and Yan (2007)  Fama (1980), Chau and Leung (2006), and Weir and Laing (2003) suggest that boards with a higher proportion of independent directors will increase the quality of monitoring over management because "they are not affiliated with the company as officers or employees, and thus are independent representatives of the shareholders' interests" (Pincus et al., 1989). On the other hand, Eng and Mak (2003), Barako et al. (2006), and Gul and Leung (2004) report a significant negative association between the level of voluntary disclosure and board independence. Al-Moataz and Hussainey (2013) also find a negative association between corporate governance, voluntary disclosures and board independence in Saudi Arabia, and therefore leads to a lower level of CG Index.

H3: There is a negative relationship between the proportion of independent directors on the board and corporate governance index ( ) of the fund management company.
Board committee structure: to examine the role of board committee structure on the performance of mutual funds, this paper focuses on investment committees and audit committees. Similar to Chan et al. (2013) and Lassoued and Elmir (2012), the proportion of directors on the audit committee and the proportion of directors on the investment committee are included in the regression analysis. Furthermore, Klein (1998) finds a positive correlation between the percentage of inside directors on investment committees and stock returns. This result is consistent with Fama and Jensen's (1983) argument that inside director presents prominent knowledge helping the board of directors to make the right investment decisions in the long-term strategy. Similarly, Lam and Lee (2012) find that there is a positive correlation between nomination committee and performance. Although, in this paper there is not any significant relationship neither between the proportion of directors in the investment committee and fund performance (measured by Absolute return, Sharpe ratio and Treynor ratio), nor between the proportion of directors in the audit committee and fund performance (measured by Absolute return, Sharpe ratio and Treynor ratio), the results are consistent with Dowers (1997) argument that investment committee and audit committee are not statistically significantly related to the fund return.
Empirical evidence suggests that audit committees which consist of non-executive directors play a complementary role to information disclosure to decrease agency costs (Forker, 1992;Barako et al, 2006Fama, 1980Collier, 1993). Samaha andDahawy (2010 and2011, in press) found an audit committee existence complementary effect on the general corporate voluntary disclosures in Egypt; and therefore leads to a higher level of CG Index (Samaha et al, 2012).

H4: There is a positive relationship between the proportion of directors on the audit committee and corporate governance index ( ) of the fund management company.
Equity ownership by directors: Morck et al (1988) examine the effect of managerial ownership on firm value, as measured by Tobin's Q. They find that there is a positive correlation between managerial ownership and firm value. Short and Keasey (1999) demonstrate that at higher levels of managerial ownership, firms in UK achieve better. Similarly, Mehran (1995) argues that that there is a positive correlation between the proportion of equity held by managers and firm performance. Similar to Ferris and Yan (2007), equity ownership by each director is reported within one of five EGP ranges. The proportion of directors holding zero shares are used as the empirical measure of equity ownership by directors rather than the proportion of directors holding more than EGP 100,000 (or any other EGP range), because holding zero shares of the funds are highly revealing of the absence of any incentive ijef.ccsenet.org International Journal of Economics and Finance Vol. 12, No. 3; 2020 6 for the fund directors.

H5: There is a negative relationship between the equity ownership by the directors ( ) and fund performance(
).

H6: There is a positive relationship between the equity ownership by the directors ( ) and the corporate governance index ( ) of the fund management company.
Corporate governance index: Similar to Erkens et al (2012), the influence of corporate governance on firm performance is explored. A governance index is constructed -calculated as an average of six governance indicators -using the annual reports of the companies and the companies' websites -based on the OECD Corporate Governance Principles April 2004 (EFSA).
H7: There is a positive relationship between the corporate governance index ( ) of the fund management company and fund performance( ). 2) The rights of shareholders: the corporate governance framework should protect and facilitate the exercise of shareholders' rights.
3) The equitable treatment of shareholders: the corporate governance framework should ensure the equitable treatment of all shareholders, including minority and foreign shareholders.
4) The role of stakeholders in corporate governance: the corporate governance framework should recognize the rights of stakeholders established by law or through mutual agreements and encourage active cooperation between corporations and stakeholders in creating wealth, and the sustainability of financially sound enterprises.
5) Disclosure and transparency: the corporate governance framework should ensure that timely and accurate disclosure is made on all material matters regarding the corporation, including the financial situation, performance, ownership, and governance of the company.
6) The responsibilities of the board: the corporate governance framework should ensure the strategic guidance of the company, the effective monitoring of management by the board, and the board's accountability to the company and the shareholders.
A series of dummy variables is included to describe each of the six components of the corporate governance index of each company represented in the sample to take a value of 1 to indicate the presence of each governance indicator, and zero to indicate the absence of each governance indicator.
We assume that we can write the score of each company for each of the six components of governance index as follows: where: : the average corporate governance score for company i at time t; is the total corporate governance score for company i, and n is the number of governance indicators (six) included in the corporate governance index.
The following discussion contains a brief description of the control variables.
Time: the period of the study is the years between 2004 and 2013 due to data availability that can affect the performance of the fund. Jones (2007) suggests that investors who wish to maximize return should start their search by looking for younger funds. Similarly, Aggarwal and Jorion (2010) find strong evidence of out-performance of ijef.ccsenet.org International Journal of Economics and Finance Vol. 12, No. 3;2020 hedge funds during the first two to three years of existence. Based upon the previous discussion, there is a negative relationship between the fund age -which increases over time -and fund performance. Accordingly, there is a negative relationship between the time and fund performance.
Investment objective dummy variables: the type of investment objective a fund adopts affects the risk of a fund's investment portfolio and the return that the fund earns (Williamson, 1972). Similar to Ferris and Yan (2007) Standard Deviation of the Stock Return: Agrawal and Knoeber (1996) include standard deviation of the mutual fund return in their analysis as one of the indicators of the cost arises from holding undiversified portfolio, and they find a negative relationship between the standard deviation of the stock return and the percentage of shares owned by directors. Similar to them, the standard deviation of the mutual fund return is included on model (A) only to control for the total risk, because Perf1 (Absolute Performance) is not a risk-adjusted measure like the other two models. Finally, the following Table 1 summarizes the key studies in the previous literature that investigate the effect of board structure on funds' performance.

The Data
The simple random sample for the study is nearly the entire population existing between 2004 and 2013, which are 82 mutual funds due to data availability. The sample is free from survivorship bias, since the sample includes both surviving and dead funds.

Endogenous and Exogenous Variables Measurements
This study uses different endogenous variables, exogenous variables, and control variables which might influence the fund performance (Huber & Mellace, 2013). The endogenous variables in this study are the financial performance of mutual funds in the Egyptian Stock Market, corporate governance index, and director ownership. The empirical analysis is carried out at different levels: firstly, an absolute performance analysis is presented before risk adjusted performance analysis ratios such as Treynor and Sharpe's are carried out.
Therefore, a mutual fund with large Treynor ratio and low Sharpe ratio indicates that it has a relatively larger unsystematic risk (Bodie et al., 2007). See, Table 2 providing a full set of variables of the study (Huber & Mellace, 2013).
Similar to Agrawal and Knoeber (1996), the standard deviation of the mutual fund return is included on model (A) only to control for the total risk, because Perf1 (Absolute Performance) is not a risk-adjusted measure like the other two models. Finally, the following Table 1 summarizes the key studies in the previous literature that investigate the effect of board structure on funds' performance.

Description of Sample Characteristics
This section presents descriptive statistics regarding board structure and fund perfor-mance. Table 3

Empirical Evidence
To test the effect of board composition on mutual fund performance, this paper utilizes SEM technique to deal with the endogeniety problem through the following three stages model specification, model estimation, and goodness of fit indices (Hair et al., 2006).
The differences in the significance levels between the three models are driven by thedivergence between Treynor ratio (Perf3), Sharpe ratio (Perf2), and the absolute per-formance (Perf1) -which are presented before risk adjusted performance analysis ratios such as Treynor and Sharpe's that are carried out -in ranking investment portfolios.
Furthermore, the major limitation of the Treynor Index is that it can be utilized to the schemes with positive betas which indicate a positive correlation with the market movement. The results will mislead if applied to the schemes with negative betas which indicate an inverse relationship with the market movement. In model (C), there are about 173 observations with negative betas, and due to the previous limitation of Treynor Ratio, results are misleading when applied to the schemes with negative betas. Therefore, in model (C) -Perf3 measured by Treynor Ratio -and unlike the previous two models, there is only one estimated coefficient for the path Fund Obj5→ Perf3 which is statistically significant and all other estimated coefficients are insignificant.

The Estimation Results
The results about the estimation of the structural model (A), (B), and (C) are presented in Table 4.
According to the previous, in testing the hypotheses, results reveal that there are eleven hypotheses in this study, and ten hypotheses i.e. H1, H2, H3, H4, H5, and H6 are statistically significant. Thus, these hypotheses are supported. While, one hypothesis i.e. H7 is found statistically not significant. Hence, this hypothesis is not supported.
Although the hypothesis is not supported, the result is consistent with Ebaid (2011) argument that the internal audit function in Egypt suffers from many weaknesses that affect negatively its effective role in corporate governance. First, internal audit in Egyptian firms does not enjoy a considerable level of organizational independence or management support, and it does not have the adequate level of qualification necessary to fulfill their new responsibilities.
Second, the internal audit function in the Egyptian firms still focuses on the tradition-al role pertaining to traditional financial audit and has not shifted to the new expand-ed role, whereas internal audit added value to the organization through providing as-surance and consulting activities pertaining to monitoring, evaluating, and improving risk management, control, and governance process. Finally, there is a weak level of interaction between internal and external audit in Egyptian firm.
Furthermore, the result is consistent with Fawzy (2003) argument that however corpo-rate governance standards in Egypt have improved significantly, as reflected in the overall assessment of all five OECD principles, the degree of progress is still far from properly implementing corporate governance principles.

The Goodness of Fit
The fit indices shown in Table 6  In Table 7 the (R-squared) value of Perf3 (measured by Treynor ratio) is 0.01 and is considered low. This might be due to the major limitation of the Treynor ratio that the results will mislead if applied to the schemes with negative betas, and in model (C), there are 173 observations with negative betas.

Conclusion
Achieving the aim of this study contributes to the finance literature at three levels, theoretical, methodological and empirical levels. At the theoretical level, firstly, this study bridges the gap between different disciplines including financial performance, mutual fund industry, and corporate governance. Unlike previous studies (Morck et al., 1988;Klein, 1998;Eisenberg et al., 1998), the theoretical model provides insights into the interrelations between board structure, and ownership structure as fundamental determinants of mutual fund performance rather than investigating the effect of each of these mechanisms separately. Secondly, by studying the relationship between board structure and investor welfare, this study indirectly examines the effect of the regulatory requirement.
At the methodological level, unlike previous studies that have addressed that the relationship between board characteristics and firm performance may be spurious because they are endogenously determined and use OLS, 2SLS, 3SLS to overcoming this problem (Erkens et al., 2012;Hermalin & Weisbach, 2001;Coles et al., 2008;Bhagat & Black, 2002), this study has achieved the broad objective of developing sophisticated statistical technique of multivariate data analysis (SEM) using STATA (MP v.13). The sample size is large enough to distinguish between different fund performance measures and provide possible differences in the results due to using different measures.
At the empirical level, this study is undertaken in Egypt, and provides evidence from the emerging markets which differ significantly from the developing markets (Farooque et al., 2007). Finally, the study provides evidence against the argument that corporate governance has a significant impact on performance in Egypt, at the level of the mutual funds. However, the study provides evidence of a positive association between independent directors and performance, and a positive association between equity ownership by directors and performance. The findings suggest that governance rules are included in the Egypt Code of Corporate Governance: Guidelines and Standards are not mandatory and lack legislative force (Sharma et al., 2008).
For future research, the model in this study could be expanded to include more factors such as director compensation, because there is no data available for complex-level director compensation in the Egyptian mutual funds. Thus, this paper suggests that the Egyptian Stock Market should require funds to disclose the total director compensation by the complex rather than per fund. The availability of time series data on director compensation by the complex leads to higher quality compensation data for research on the relationship between compensation and performance.
This paper conclude that most of the hypothesized relationships are supported (e.g. BSize is positively associated ijef.ccsenet.org International Journal of Economics and Finance Vol. 12, No. 3;2020 with Perf2 and CGQ, IndDir is positively associated with Perf2 and negatively associated with CGQ, ProfDir is positively associated with Perf2 and negatively associated with DirOwn, AudComm is positively associated with CGQ, DirOwn is negatively associated with Perf2, DirFn is negatively associated with Perf2, and DirTn is negatively associated with CGQ). One is not supported (e.g., CGQ is not associated with Perf1, Perf2, and Perf3).
Additionally, this paper is consistent with (Kryzanowski & Mohebshahedin, 2016) argument that that there is a positive relationship between ownership by directors and CEF returns (closed-end funds).
The main conclusion of this paper is to provide evidence through robust statistical analysis around the usefulness of governance attributes Egyptian mutual funds" performance. The paper finds no evidence on a significant relation between the corporate governance index of the fund management company and fund performancemeasured by Absolute performance, Sharpe ratio, and Treynor ratio.
Therefore, this paper is consistent with Kirkpatrick (2009) argument that the contribution of effective board oversight and robust risk management including reference to widely accepted standards is not limited to financial institutions. It is also an important, but often neglected, governance aspect in nonfinancial companies. Potential weaknesses in board composition have been obvious for some time and widely debated. The remuneration of boards and senior management also remains a highly controversial issue in many OECD countries.      Effect P-val Effect P-val Effect P-val Effect P-val Effect P-val Effect P-val Effect P-val Effect P-val Effect P-val  Effect P-val Effect P-val Effect P-val Effect P-val Effect P-val Effect P-val Effect P-val Effect P-val Effect P-val   Note. MC = correlation between dependent variables and its predictions.

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