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

  • Bao Ngoc Dinh

    ((Axe de recherche : Finance) - CERAG - Centre d'études et de recherches appliquées à la gestion - Grenoble 2 UPMF - Université Pierre Mendès France - CNRS)

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    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.

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    Paper provided by HAL in its series Post-Print with number halshs-00658489.

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    Date of creation: 2011
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    Handle: RePEc:hal:journl:halshs-00658489
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00658489
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    1. Kotter, Jason & Lel, Ugur, 2011. "Friends or foes? Target selection decisions of sovereign wealth funds and their consequences," Journal of Financial Economics, Elsevier, vol. 101(2), pages 360-381, August.
    2. Shleifer, Andrei & Vishny, Robert W, 1986. "Large Shareholders and Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 461-88, June.
    3. 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.
    4. Edwin M. Truman, 2007. "Sovereign Wealth Funds: The Need for Greater Transparency and Accountability," Policy Briefs PB07-6, Peterson Institute for International Economics.
    5. Heiko Hesse & Tao Sun, 2009. "Sovereign Wealth Funds and Financial Stability-An Event Study Analysis," IMF Working Papers 09/239, International Monetary Fund.
    6. 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.
    7. Roland Beck & Michael Fidora, 2008. "The impact of sovereign wealth funds on global financial markets," Occasional Paper Series 91, European Central Bank.
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