Discussion of Does Skin in the Game Matter? Director Incentives and Governance in the Mutual Fund Industry Martijn Cremers Joost Driessen Yale SOM Univ. of Amsterdam Yale SOM Univ. of Amsterdam Pascal Maenhout David Weinbaum Insead Cornell Insead Cornell

Paper’s strengths Data description of director ownership in mutual funds.Data description of director ownership in mutual funds. Consideration of alternative explanations (signaling) of their finding of a positive correlation between director ownership and fund performance.Consideration of alternative explanations (signaling) of their finding of a positive correlation between director ownership and fund performance.

3 Sample result: Table 2

S.P. Kothari and Jerold Warner, “Evaluating Mutual Fund Performance.” (Journal of Finance, 2001) Using state-of-the-art techniques, can we detect superior mutual fund performance? 100 basis points annual superior performance: Undetected. 500 basis points: Detected once every three times basis points: Detected (almost) every time.

5 Mechanics of how ownership impacts performance Median independent director owns about $73,000 in the fund family. Median non-independent director owns about $100,000 in the fund family.

6 Paper is well-motivated and written. Makes important contributions to the mutual fund and governance literature. Has constructive policy suggestions.