Abstract
In this article, the authors investigate the relationship between mutual fund governance and tax efficiency. They use an overall fund governance grade and components of that governance grade--board quality, managerial incentives, corporate culture, fees, and regulatory compliance--to evaluate the effect of governance on a fund's tax efficiency. They measure tax efficiency as the percentage of the fund's return that is lost to taxes. They find that a fund's overall stewardship grade positively affects its tax efficiency. Of the five determinants of the overall stewardship grade, they find that corporate culture, managerial incentives, and regulatory compliance play significant roles in influencing a mutual fund's tax efficiency.