TY - JOUR
T1 - Sovereign wealth funds and equity pricing
T2 - Evidence from implied cost of equity of publicly traded targets
AU - Boubaker, Sabri
AU - Boubakri, Narjess
AU - Grira, Jocelyn
AU - Guizani, Asma
N1 - Funding Information:
We thank the participants at The European Financial Management Association 2017 Annual Meeting, The 2018 Mediterranean and African Finance and Accounting Association Conference, The 2018 World Finance Conference, and the departmental seminar organized by Zayed University. We also gratefully acknowledge the financial support from the UAE University's Program for Advanced Research, UPAR (Grant # G00002122 ).
Publisher Copyright:
© 2018
PY - 2018/12
Y1 - 2018/12
N2 - We investigate the impact of sovereign wealth fund (SWF) investment on ex ante (implied) cost of equity capital of targeted firms. Using an international sample of 310 targets involved in 403 SWF deals and their matched firms, we find that targeted firms exhibit, on average, higher cost of equity financing than their peers after the announcement date. Firms involved in domestic deals and deals concluded during the Global Financial Crisis exhibit lower implied cost of equity financing, while those involved in cross-border deals are associated with higher implied cost of equity capital.
AB - We investigate the impact of sovereign wealth fund (SWF) investment on ex ante (implied) cost of equity capital of targeted firms. Using an international sample of 310 targets involved in 403 SWF deals and their matched firms, we find that targeted firms exhibit, on average, higher cost of equity financing than their peers after the announcement date. Firms involved in domestic deals and deals concluded during the Global Financial Crisis exhibit lower implied cost of equity financing, while those involved in cross-border deals are associated with higher implied cost of equity capital.
KW - Cost of equity capital
KW - Institutional environment
KW - Sovereign wealth funds
UR - http://www.scopus.com/inward/record.url?scp=85055983220&partnerID=8YFLogxK
U2 - 10.1016/j.jcorpfin.2018.10.007
DO - 10.1016/j.jcorpfin.2018.10.007
M3 - Journal Article
AN - SCOPUS:85055983220
SN - 0929-1199
VL - 53
SP - 202
EP - 224
JO - Journal of Corporate Finance
JF - Journal of Corporate Finance
ER -