Sovereign Wealth Fund Investments and Firm Value

  •  Dinh Ngoc    


This research aims to analyze the impact of Sovereign Wealth Fund (SWF) investments on the values of companies in which they invest. We attempt to provide evidences of the effects of SWF investment activities by examining the short-term impact of SWF investments on the performance of the companies. In order to quantify the valuation effects of SWF investments, we collect data on equity investments for each SWF and 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. The sample consists of 61 investments by 11 important SWFs from around the world (China, Singapore, United Arab Emirates, Russia, France etc.) during the period 2003 to 2014. We find that the anouncement effect of SWF investments in the 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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