Sovereign wealth funds and equity pricing: Evidence from implied cost of equity of publicly traded targets

Sabri Boubaker; Narjess Boubakri; Jocelyn Grira; Asma Guizani

doi:10.1016/j.jcorpfin.2018.10.007

Sovereign wealth funds and equity pricing: Evidence from implied cost of equity of publicly traded targets

Sabri Boubaker, Narjess Boubakri, Jocelyn Grira, Asma Guizani

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

26 Citations (Scopus)

Abstract

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.

Original language	English
Pages (from-to)	202-224
Number of pages	23
Journal	Journal of Corporate Finance
Volume	53
DOIs	https://doi.org/10.1016/j.jcorpfin.2018.10.007
Publication status	Published - Dec 2018

Keywords

Cost of equity capital
Institutional environment
Sovereign wealth funds

ASJC Scopus subject areas

Business and International Management
Finance
Economics and Econometrics
Strategy and Management

Access to Document

10.1016/j.jcorpfin.2018.10.007

Cite this

@article{c038cd0541ed4483a809a27558c4536e,

title = "Sovereign wealth funds and equity pricing: Evidence from implied cost of equity of publicly traded targets",

abstract = "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.",

keywords = "Cost of equity capital, Institutional environment, Sovereign wealth funds",

author = "Sabri Boubaker and Narjess Boubakri and Jocelyn Grira and Asma Guizani",

note = "Publisher Copyright: {\textcopyright} 2018",

year = "2018",

month = dec,

doi = "10.1016/j.jcorpfin.2018.10.007",

language = "English",

volume = "53",

pages = "202--224",

journal = "Journal of Corporate Finance",

issn = "0929-1199",

publisher = "Elsevier B.V.",

}

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

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

UR - http://www.scopus.com/inward/citedby.url?scp=85055983220&partnerID=8YFLogxK

U2 - 10.1016/j.jcorpfin.2018.10.007

DO - 10.1016/j.jcorpfin.2018.10.007

M3 - Article

AN - SCOPUS:85055983220

SN - 0929-1199

VL - 53

SP - 202

EP - 224

JO - Journal of Corporate Finance

JF - Journal of Corporate Finance

ER -

Sovereign wealth funds and equity pricing: Evidence from implied cost of equity of publicly traded targets

Abstract

Keywords

ASJC Scopus subject areas

Access to Document

Other files and links

Fingerprint

Cite this