scholarly journals The global sustainability footprint of sovereign wealth funds

2020 ◽  
Vol 36 (2) ◽  
pp. 380-426 ◽  
Author(s):  
Hao Liang ◽  
Luc Renneboog
Keyword(s):  
Investment Decisions ◽  
Deepwater Horizon ◽  
Developed Countries ◽  
Natural Experiments ◽  
Subsequent Evolution ◽  
Sovereign Wealth Funds ◽  
Exogenous Shocks ◽  
Score Improvement ◽  
Target Firms ◽  
Sustainability Footprint

Abstract With the emergence of sovereign wealth funds (SWFs) around the world managing equity of over $8 trillion, their impact on the corporate landscape and social welfare is being scrutinized. This study investigates whether and how SWFs incorporate environmental, social, and governance (ESG) considerations in their investment decisions in publicly listed corporations, as well as the subsequent evolution of target firms’ ESG performance. We find that SWF funds do consider the level of past ESG performance as well as recent ESG score improvement when taking ownership stakes in listed companies. These results are driven by the SWF funds that do have an explicit or implicit ESG policy and are most transparent, and by SWF originating from developed countries and countries with civil law origins. In relation to engagement, we find by means of two natural experiments with exogenous shocks (the Deepwater Horizon catastrophe and Volkwagen diesel scandal) that the ESG scores do not change significantly more for firms in which SWFs have ownership stakes. This potentially suggests that SWFs in general do not actively steer their target firms towards higher levels of ESG.

scholarly journals Sovereign Wealth Funds’ Affiliation and Acquisition Premium: Evidence from the Asia-Pacific Region

2019 ◽  
Vol 8 (1) ◽  
pp. 25-49
Author(s):  
Ali Awais Khalid ◽  
Ghulame Rubbaniy ◽  
Muhammad Faisal Rizwan ◽  
Hassan Rauf Chaudhry
Keyword(s):  
Bargaining Power ◽  
Asia Pacific ◽  
Asia Pacific Region ◽  
Sovereign Wealth Funds ◽  
Sectoral Analysis ◽  
The North ◽  
Target Firms ◽  
Country Analysis ◽  
Cross Country ◽  
Acquisition Premium

This study aims to extend the signaling theory, by offering the buy-side sovereign wealth fund’s (SWF) affiliation as a signal of the acquisition premium. Using the mergers and acquisitions (M&As) deals’ data from Asia-Pacific, over the period from 2000-2017, the results reveal that the effect of buy-side SWF’s affiliation, on the acquisition premium of target firms is negative, and statistically significant in the North Asian region. Our cross-country analysis shows a negatively significant effect of the buy-side SWF’s affiliation on the acquisition premium in China. The findings of our sectoral analysis report a significantly adverse effect of SWF’s affiliation on the acquisition premium in the energy and cyclical goods sector. This suggests that the SWFs are likely to be more influential in M&As deals that are conducted in the strategic sectors. Our findings demonstrate that the buy-side SWF’s affiliation can be used as a signal of quality. That is to say that this affiliation increases the bargaining power of buyers to reduce the acquisition premium for targets. The findings are particularly important for the managers of firms managing SWFs’ investments, as they can negotiate better deals with the targets due to the managers’ affiliation with the SWFs.

scholarly journals The Importance and Perspectives of Sovereign Wealth Funds in the Globalised Economy

2021 ◽  
Vol 92 ◽  
pp. 03006
Author(s):  
Jan Černohorský ◽  
Kateřina Tesnerová
Keyword(s):  
Value Added ◽  
Developed Countries ◽  
Investment Strategies ◽  
Potential Threat ◽  
Sovereign Wealth Funds ◽  
Specific Investment ◽  
Definition Of ◽  
The Given ◽  
Asset Managers

Research background: The ever-increasing degree of globalization is reflected, among other things, in the establishment of relatively new institutional investors - sovereign wealth funds. Until the financial crisis in 2008, these funds were considered by many developed countries to be a potential threat to national security. However, this changed when they invested large sums in bankrupt companies and banks during the crisis. However, fears of their influence remain. Purpose of the article: The paper aims to assess the importance and perspectives of sovereign wealth funds in the world economy. In this paper, we start with the definition of sovereign wealth funds and distinguish them from other state asset managers. We also focus on assessing their importance within the global investor portfolio and their impact on global economic development. Methods: We used an analysis of available financial and economic data related to their activities and comparison with selected asset managers. Findings & Value added: We discuss their specific investment strategies and their transparency, which affect their credibility. Within the evaluation, the positive benefits outweigh the risks of sovereign wealth funds. However, we should always assess in the context of a specific sovereign wealth fund. The importance of sovereign wealth funds and their impact will continue to grow, even though their relative share of the global financial market is not very high. Thanks to their long-term investments, they contribute to greater stability of the financial markets of the given countries.

Sovereign Wealth Fund Investment and Firm Volatility

2017 ◽  
Author(s):  
April Knill ◽  
Nathan Mauck
Keyword(s):  
Idiosyncratic Risk ◽  
Investment Horizon ◽  
Popular Press ◽  
Sovereign Wealth Funds ◽  
Sovereign Wealth Fund ◽  
Target Firms ◽  
Fund Investment ◽  
The Relationship ◽  
Target Markets

The popular press and politicians have expressed concerns regarding the potential destabilizing force of sovereign wealth funds (SWFs). This chapter addresses these concerns by presenting results from the literature on the volatility and compensation of risk of SWF target firms and target markets. SWF investments (sales) are associated with a reduction (increase) in the compensation of risk for a three-year (five-year) term. Firm volatility decomposition suggests that it is mainly idiosyncratic risk that drives these impacts. The chapter reviews evidence and data that show the relationship between SWF investment and firm volatility depends on the investment horizon examined. It explains that the evidence is consistent with the view that the relationship between SWF investment and firm volatility is mainly attributable to idiosyncratic risk.

scholarly journals Mine, Yours or Ours? The Efficiency of Household Investment Decisions: An Experimental Approach

2020 ◽  
Vol 34 (3) ◽  
pp. 575-596
Author(s):  
Anandi Mani
Keyword(s):  
Household Income ◽  
Experimental Approach ◽  
Social Norm ◽  
Investment Decisions ◽  
Developed Countries ◽  
Investment Efficiency ◽  
Income Share ◽  
Persistent Effect ◽  
Household Resources ◽  
The Impact

Abstract This article sheds light on the impact on household investment efficiency of a social norm that a man should not earn less than his wife. The experiment distinguishes this impact from that of spouses’ desire for control over household resources. Both husbands and wives are found to sacrifice household income (efficiency) for greater control; but, consistent with this social norm, husbands alone behave inefficiently if assigned a smaller income share than their spouse. The evidence suggests spiteful behavior among such husbands: they are willing to undercut their own income to narrow the gap with their wives’ earnings. The magnitude of husbands’ inefficiency influenced by this social norm is comparable to that when husbands have the least control over household earnings. These results, taken together with evidence from developed countries, show that this social norm has a persistent effect on household efficiency, distinct from spouses’ economic concerns.

scholarly journals Heuristic and Biases Related to Financial Investment and the Role of Behavioral Finance in Investment Decisions: A Case Study of Pakistan Stock Exchange

2021 ◽  
Vol 4 (2) ◽  
pp. 227-236
Author(s):  
YASIR KHAN ◽  
ABDUL WAHEED KHAN ◽  
MUKHARIF SHAH ◽  
DR. SHAFIQ UR REHMAN
Keyword(s):  
Behavioral Finance ◽  
Stock Exchange ◽  
Investment Decisions ◽  
Developed Countries ◽  
Main Stream ◽  
Cross Sectional ◽  
Investment Performance ◽  
Financial Investment ◽  
The World

The Behavioral Determinants (BD) of Perceived Investment Performance (PIP) are considered to be one of the most sizzling research concerns in the world of investment behavioral finance. Therefore, the main purpose of this study was to investigate the Heuristic and Biases Related to Financial Investment and the Role of Behavioral Finance in Investment Decisions in case of Pakistan stock exchange (PSX). Specifically, this study amid at to identify which biases impact more on PIP and to identify useful insights from the results of the study that may benefit in this discipline. Five likert scale questionnaire adapted from prior studies as it is satisfying the current scenario for industry settings of PSX. A quantitative cross sectional research design has been used in this study. The regression results found that the herding effects, over confidence, availability bias and representativeness have positive and significant impact on perceived investment performance. This study has significance for the individual investors, financial advisors, companies listed in PSX and Government. For the investors, the factors that influence their investment performance are crucial as these will influence their financial plans of future. Practical implications includes investors who desires to invest should incorporate the said BD for the accurate valuation of the assets and in taking future investment decisions. In PSX, it is first endeavor to uncover the HE, OC, AB and R as BD of PIP. This paper contribute to the existing body of literature since main stream of the previous studies concentrate more on the developed countries markets of the world. Moreover, this study put forth a well-integrated model to probe the effect of variables under consideration on PSX. Reflection of the said effect of behavioral impact in the decision making process of individuals will make the decisions more optimal and rational as well.

The impact and implications of SWFs: a systematic review of literature

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Roshni Garg ◽  
Abha Shukla
Keyword(s):  
Initial Public Offerings ◽  
Future Research ◽  
Sovereign Wealth Funds ◽  
Content Type ◽  
Public Offerings ◽  
Target Firms ◽  
Governance Practices ◽  
Internationalization Strategies ◽  
Future Research Directions ◽  
The Impact

Purpose This paper aims to systematically review all available evidence on the implications of sovereign wealth funds (SWFs) for various stakeholders (recipients of sovereign investment, home countries, which incorporate SWFs and the world at large) and offer future research directions. Design/methodology/approach A systematic literature review (SLR) technique is used to review 102 handpicked articles for the period 2005‐2019. Findings This review reveals that the literature on the impact of SWFs emerged only during the financial crisis of 2008–2011 and much of it is qualitative in nature. The literature is lopsidedly focused on the impact of SWFs on target firms and there has been a limited empirical investigation of the impact on other stakeholders. There is a lack of consensus in several areas, which calls for additional research. Few areas, which have not been addressed in the literature and can be taken up by future researchers include the impact of SWFs on macroeconomic fundamentals and stock markets of recipient countries, especially emerging economies; implications of SWFs for alternative asset classes; impact on the welfare of citizens and internationalization strategies of home countries; impact on initial public offerings and unlisted corporations; and impact on innovativeness, efficiency and corporate governance practices of target firms. Originality/value To the best of the authors’ knowledge, this is the first paper to use the SLR technique to review the literature on SWFs. It considers the impact of SWFs on all stakeholders and covers both qualitative and quantitative literature published over a long period of 2005‐2019. It also systematizes all available evidence on this theme and identifies important research gaps, which may be helpful for academicians, practitioners and policymakers.

Takeover Announcements, Open Offers, and Shareholders' Returns in Target Firms

2001 ◽  
Vol 26 (3) ◽  
pp. 19-30 ◽  
Author(s):  
Ajay Pandey
Keyword(s):  
Empirical Studies ◽  
Developed Countries ◽  
Substantial Part ◽  
Target Firm ◽  
Tender Offers ◽  
Market For Corporate Control ◽  
Target Firms ◽  
Study Methodology ◽  
Private Value ◽  
Event Study Methodology

The empirical studies in the context of developed countries have consistently pointed out substantial valuation gains for target firms, particularly in case of successful takeovers. This effect has been "found to be higher for tender offers compared to mergers and proxy contests, the other forms of plays in the market for corporate control. Subsequent to enactment of takeover enabling regulations in 1997 in India, takeovers and substantial acquisition of shares necessitate making open offer to the investors. Based on the empirical investigation of 14 large (above Rs 10 crore) takeover related open offers using event study methodology, we document significant announcement effect (» 10%) associated with the takeovers in Indian capital market. We also find that the target firm valuations increase in the runup to announcement. However, unlike developed countries, substantial part of these gains are wiped out subsequently indicating that valuation gains associated with takeovers in large part reflect private value of control, expected to be high in the Indian context The fact that only one large open offer (out of 16 in all) was associated with an attempted unsuccessful hostile takeover bid suggests that given relatively large insiders' shareholdings, takeovers as governance mechanisms are not likely to be effective and private value of control may be the driver in the market for

scholarly journals Investment strategy of sovereign wealth funds from emerging markets: the case of China

2014 ◽  
Vol 24 (24) ◽  
pp. 27-40 ◽  
Author(s):  
Ewa Cieślik
Keyword(s):  
Emerging Markets ◽  
Developed Countries ◽  
Investment Strategy ◽  
Press Releases ◽  
Sovereign Wealth Funds ◽  
Lack Of Information ◽  
Central Asian ◽  
State Administration ◽  
And Performance ◽  
Investment Patterns

Abstract Chinese sovereign wealth funds SWFs continue to expand rapidly and have become increasingly active in real-time strategic transactions recently. They have focused not only on financial markets in developed countries, but they also concentrate on commodity investment in emerging markets (mainly in African or Central Asian markets). The main goal of this paper is to examine investment patterns and performance of two large Chinese sovereign wealth funds: the State Administration of Foreign Exchange Investment Company (SAFE IC) and the China Investment Corporation (CIC). In the absence of official data on the activities of the funds, the article is based largely on press releases relating to the operation of funds and corporate reports of the companies invested in by the Chinese SWFs. The paper presents sectoral and geographical directions of China’s SWFs investment and tries to describe how the investment strategy of the aforementioned vehicles changed until mid-2013. The main limitation of the adopted methodology derives from the lack of information and poor transparency of the analysed vehicles. Moreover to obtain the correct information on the details of fund investments (size, value, date) each press release requires extensive verification.

Sign in / Sign up

Export Citation Format

Share Document