TY - JOUR
T1 - The Sovereign Wealth Fund Discount
T2 - Evidence from Public Equity Investments
AU - Bortolotti, Bernardo
AU - Fotak, Veljko
AU - Megginson, William L.
N1 - Publisher Copyright:
© 2015 The Author 2015. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please e-mail: [email protected].
PY - 2015/11
Y1 - 2015/11
N2 - 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.
AB - 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.
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U2 - 10.1093/rfs/hhv036
DO - 10.1093/rfs/hhv036
M3 - Article
AN - SCOPUS:84941602835
SN - 0893-9454
VL - 28
SP - 2993
EP - 3035
JO - Review of Financial Studies
JF - Review of Financial Studies
IS - 11
ER -