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The impact of Sovereign Wealth Fund investments on the performance of listed companies

Author

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  • Bao Ngoc Dinh

    (CERAG - Centre d'études et de recherches appliquées à la gestion - UPMF - Université Pierre Mendès France - Grenoble 2 - CNRS - Centre National de la Recherche Scientifique)

Abstract

In this study, we attempt to shed some light on the effects of SWF investment activities by analyzing the short-term impact of SWF investments on the performance of those companies in which they invest. We collect both direct and indirect data on equity investments for each SWF. The sample consists of 60 investments by 11 important SWFs from around the world (SWF of the United Arab Emirates, China, Kuwait, Russia, France, Singapore...) during the period 2003 to 2009. To quantify the valuation effects of SWF investments, we use the event study methodology to estimate abnormal returns to the shares around the times that news of the transactions of SWFs becomes publicly available. We find that the announcement effect of SWF investments in listed companies is positive and the level of transparency of SWFs influence the positive impact of SWF investments on the performance of those companies in which they invest.

Suggested Citation

  • Bao Ngoc Dinh, 2011. "The impact of Sovereign Wealth Fund investments on the performance of listed companies," Post-Print halshs-00658489, HAL.
    • Handle: RePEc:hal:journl:halshs-00658489
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00658489
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    References listed on IDEAS

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    1. William L. Megginson & Bernardo Bortolotti & Veljko Fotak & William Miracky, 2009. "Sovereign Wealth Fund Investment Patterns and Performance," Working Papers 2009.22, Fondazione Eni Enrico Mattei.
    2. Edwin M. Truman, 2009. "A Blueprint for Sovereign Wealth Fund Best Practices," Revue d'Économie Financière, Programme National Persée, vol. 9(1), pages 429-451.
    3. Shleifer, Andrei & Vishny, Robert W, 1997. "A Survey of Corporate Governance," Journal of Finance, American Finance Association, vol. 52(2), pages 737-783, June.
    4. Roland Beck & Michael Fidora, 2008. "The impact of sovereign wealth funds on global financial markets," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 43(6), pages 349-358, November.
    5. Bortolotti, Bernardo & Fotak, Veljko & Megginson, William & Miracky, William, 2009. "Sovereign Wealth Fund Investment Patterns and Performance," Institutions and Markets Papers 50407, Fondazione Eni Enrico Mattei (FEEM).
    6. Edwin M. Truman, 2007. "Sovereign Wealth Funds: The Need for Greater Transparency and Accountability," Policy Briefs PB07-6, Peterson Institute for International Economics.
    7. Mr. Heiko Hesse & Tao Sun, 2009. "Sovereign Wealth Funds and Financial Stability—An Event Study Analysis," IMF Working Papers 2009/239, International Monetary Fund.
    8. Shleifer, Andrei & Vishny, Robert W, 1986. "Large Shareholders and Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 461-488, June.
    9. Laeven, Luc & Chhaochharia, Vidhi, 2008. "Sovereign Wealth Funds: Their Investment Strategies and Performance," CEPR Discussion Papers 6959, C.E.P.R. Discussion Papers.
    10. Jason Kotter & Ugur Lel, 2008. "Friends or foes? The stock price impact of sovereign wealth fund investments and the price of keeping secrets," International Finance Discussion Papers 940, Board of Governors of the Federal Reserve System (U.S.).
    11. Roland Beck & Michael Fidora, 2008. "The impact of sovereign wealth funds on global financial markets," Intereconomics: Review of European Economic Policy, Springer;German National Library of Economics;Centre for European Policy Studies (CEPS), vol. 43(6), pages 349-358, November.
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    Cited by:

    1. Urban Dariusz, 2017. "The Color of Government Money. Do Investors Differently Value the Investment of Sovereign Wealth Funds?," Financial Internet Quarterly (formerly e-Finanse), Sciendo, vol. 13(1), pages 25-34, November.

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    Keywords

    Sovereign wealth funds; performance; event study;
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