The Sovereign Wealth Fund Discount: Evidence from Public Equity Investments

Bernardo Bortolotti, Veljko Fotak, William L. Megginson

Research output: Contribution to journalArticlepeer-review


We document that announcement-period abnormal returns of sovereign wealth fund (SWF) equity investments in publicly traded firms are positive but lower than those of comparable private investments. Further, SWF investment targets suffer from declining return on assets and sales growth over the following three years. Our results are robust to controls for target and deal characteristics and are not driven by SWF target selection criteria. Larger discounts are associated with SWFs taking seats on boards of directors and with SWFs under strict government control acquiring greater stakes, supporting the hypothesis that political influence negatively affects firm value and performance.

Original languageEnglish (US)
Pages (from-to)2993-3035
Number of pages43
JournalReview of Financial Studies
Issue number11
StatePublished - Nov 2015

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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