Best practices implementation in mutual funds

This paper examines the implementation of best practices for fund directors as outlined by the Investment Company Institute (ICI) in the summer of 1999. Following a series of well publicised scandals across the financial services industry, the issue of corporate governance within mutual funds is both timely and practical. The purpose of the study is to measure the consistency of implementation of the 15 best practices within fund families. The data indicate that mutual funds, in general, currently follow the guidelines proposed by the ICI. This suggests that most funds are undertaking efforts to protect investors and separate the interests of management from those of investors. These findings also have implications for proposed federal legislation. If mutual funds have already adopted procedures designed to protect investors, additional regulation is redundant.