Sovereign wealth funds investment effects on target firms' competitors

Narjess Boubakri; Jean Claude Cosset; Jocelyn Grira

doi:10.1016/j.ememar.2016.09.003

Sovereign wealth funds investment effects on target firms' competitors

Narjess Boubakri, Jean Claude Cosset, Jocelyn Grira

Faculty of Business

Research output: Contribution to journal › Journal Article › peer-review

27 Citations (Scopus)

Abstract

We investigate the impact of sovereign wealth funds acquisitions (SWFs) on the performance of target firms' competitors. We find a positive and significant impact of SWFs acquisitions on target firms' competitors. This means that market participants anticipate value creation in the targets competitors, due to likely expected restructuring activities. Further analysis shows that relatively large rivals, low leveraged rivals, rivals with highly correlated returns with those of their corresponding targets, rivals in less competitive industries show higher abnormal returns upon the acquisition announcement. Our results question the rationality of protectionism as legal barriers to sovereign wealth funds cross-border investments.

Original language	English
Pages (from-to)	96-112
Number of pages	17
Journal	Emerging Markets Review
Volume	30
DOIs	https://doi.org/10.1016/j.ememar.2016.09.003
Publication status	Published - 1 Mar. 2017

Keywords

Cumulative abnormal returns
Intra industry effects
Sovereign wealth funds

Access to Document

10.1016/j.ememar.2016.09.003

Cite this

@article{ba55b66eeeab476da0d6d88efb78316b,

title = "Sovereign wealth funds investment effects on target firms' competitors",

abstract = "We investigate the impact of sovereign wealth funds acquisitions (SWFs) on the performance of target firms' competitors. We find a positive and significant impact of SWFs acquisitions on target firms' competitors. This means that market participants anticipate value creation in the targets competitors, due to likely expected restructuring activities. Further analysis shows that relatively large rivals, low leveraged rivals, rivals with highly correlated returns with those of their corresponding targets, rivals in less competitive industries show higher abnormal returns upon the acquisition announcement. Our results question the rationality of protectionism as legal barriers to sovereign wealth funds cross-border investments.",

keywords = "Cumulative abnormal returns, Intra industry effects, Sovereign wealth funds",

author = "Narjess Boubakri and Cosset, {Jean Claude} and Jocelyn Grira",

note = "Publisher Copyright: {\textcopyright} 2016 Elsevier B.V.",

year = "2017",

month = mar,

day = "1",

doi = "10.1016/j.ememar.2016.09.003",

language = "English",

volume = "30",

pages = "96--112",

}

TY - JOUR

T1 - Sovereign wealth funds investment effects on target firms' competitors

AU - Boubakri, Narjess

AU - Cosset, Jean Claude

AU - Grira, Jocelyn

PY - 2017/3/1

Y1 - 2017/3/1

N2 - We investigate the impact of sovereign wealth funds acquisitions (SWFs) on the performance of target firms' competitors. We find a positive and significant impact of SWFs acquisitions on target firms' competitors. This means that market participants anticipate value creation in the targets competitors, due to likely expected restructuring activities. Further analysis shows that relatively large rivals, low leveraged rivals, rivals with highly correlated returns with those of their corresponding targets, rivals in less competitive industries show higher abnormal returns upon the acquisition announcement. Our results question the rationality of protectionism as legal barriers to sovereign wealth funds cross-border investments.

AB - We investigate the impact of sovereign wealth funds acquisitions (SWFs) on the performance of target firms' competitors. We find a positive and significant impact of SWFs acquisitions on target firms' competitors. This means that market participants anticipate value creation in the targets competitors, due to likely expected restructuring activities. Further analysis shows that relatively large rivals, low leveraged rivals, rivals with highly correlated returns with those of their corresponding targets, rivals in less competitive industries show higher abnormal returns upon the acquisition announcement. Our results question the rationality of protectionism as legal barriers to sovereign wealth funds cross-border investments.

KW - Cumulative abnormal returns

KW - Intra industry effects

KW - Sovereign wealth funds

UR - http://www.scopus.com/inward/record.url?scp=85008881352&partnerID=8YFLogxK

U2 - 10.1016/j.ememar.2016.09.003

DO - 10.1016/j.ememar.2016.09.003

M3 - Journal Article

AN - SCOPUS:85008881352

SN - 1566-0141

VL - 30

SP - 96

EP - 112

JO - Emerging Markets Review

JF - Emerging Markets Review

ER -

Sovereign wealth funds investment effects on target firms' competitors

Abstract

Keywords

Access to Document

Other files and links

Fingerprint

Cite this