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Do investment determinants and effects vary across sovereign wealth fund categories? A firm-level analysis

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  • Gangi, Francesco
  • Meles, Antonio
  • Mustilli, Mario
  • Graziano, Domenico
  • Varrone, Nicola

Abstract

This paper investigates whether determinants and effects of sovereign wealth funds (SWFs) investment vary across types of funds. To address this issue, we classify SWFs based on their scope and the origin of wealth. We find that saving and reserve funds and non-commodity funds pick better-performing firms. Furthermore, effects vary among SWF categories. In fact, saving and reserve funds assume a passive role in managing investments, unlike multi-objective and development funds which have detrimental effects on the target companies. As a whole, these findings confirm that heterogeneity of SWFs in terms of how they target firms and activism matters.

Suggested Citation

  • Gangi, Francesco & Meles, Antonio & Mustilli, Mario & Graziano, Domenico & Varrone, Nicola, 2019. "Do investment determinants and effects vary across sovereign wealth fund categories? A firm-level analysis," Emerging Markets Review, Elsevier, vol. 38(C), pages 438-457.
    • Handle: RePEc:eee:ememar:v:38:y:2019:i:c:p:438-457
    DOI: 10.1016/j.ememar.2018.12.004
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    Cited by:

    1. Amar, J. & Lecourt, C. & Carpantier, J.F., 2022. "GCC Sovereign Wealth Funds: Why do they take control?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 77(C).
    2. Ermanno Affuso & Khandokar M. Istiak & Alex Sharland, 2022. "Sovereign wealth funds and economic growth," Journal of Asset Management, Palgrave Macmillan, vol. 23(3), pages 201-214, May.
    3. William L. Megginson & Asif I. Malik & Xin Yue Zhou, 2023. "Sovereign wealth funds in the post-pandemic era," Journal of International Business Policy, Palgrave Macmillan, vol. 6(3), pages 253-275, September.
    4. Bahoo, Salman & Alon, Ilan & Paltrinieri, Andrea, 2020. "Sovereign wealth funds: Past, present and future," International Review of Financial Analysis, Elsevier, vol. 67(C).
    5. Heeho Kim & Sanguk Kwon & Youn Seol, 2022. "Currency Bias of Sovereign Wealth Fund Investments," Korean Economic Review, Korean Economic Association, vol. 38, pages 415-443.
    6. Narjess Boubakri & Veljko Fotak & Omrane Guedhami & Yukihiro Yasuda, 2023. "The heterogeneous and evolving roles of sovereign wealth funds: Issues, challenges, and research agenda," Journal of International Business Policy, Palgrave Macmillan, vol. 6(3), pages 241-252, September.
    7. Amar, J. & Lecourt, C., 2023. "Sovereign wealth fund governance: A trade-off between internal and external legitimacy," International Business Review, Elsevier, vol. 32(6).
    8. Dai, Liyan & Song, Chengxuan & You, Yu & Zhang, Wenqiao, 2022. "Do sovereign wealth funds value ESG engagement? Evidence from target firm's CSR performance," Finance Research Letters, Elsevier, vol. 50(C).
    9. Gangi, Francesco & Mustilli, Mario & Varrone, Nicola & Graziano, Domenico, 2023. "Target firms’ characteristics and the effects of sovereign wealth funds’ investments: Does cultural context of SWFs matter?," Research in International Business and Finance, Elsevier, vol. 65(C).

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    More about this item

    Keywords

    Sovereign wealth funds; SWF categories; Investment choice; Financial risk; Operating performance;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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