TY - JOUR
T1 - Sovereign wealth funds investment effects on target firms' competitors
AU - Boubakri, Narjess
AU - Cosset, Jean Claude
AU - Grira, Jocelyn
N1 - Funding Information:
We thank the participants at the 19th Eurasia Business and Economics Society (our paper is the Best Paper Award prize winner), the 52nd Annual Meeting of the Eastern Finance Association, the 65th Annual Meeting of the Midwest Finance Association, the 15th World Business Research Conference, the 6th International Research Meeting in Business and Management, the 22nd Annual Conference of the Multinational Finance Society, the 2015 European Financial Management Association Annual Conference, the 7th Annual Research Symposium in Business and Economics, the Global Conference on Business Management and Social Sciences 2016, and the departmental seminar organized by the Department of Economics and Finance in the College of Business and Economics of UAE University. We gratefully acknowledge the financial support from UAE University (Program for Advanced Research, Start-up Program), the UAE University Center for Public Policy and Leadership, from HEC Montreal, from Institut de Finance Mathematique de Montreal (IFM2), and from the Social Sciences and Humanities Research Council of Canada.
Publisher Copyright:
© 2016 Elsevier B.V.
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
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U2 - 10.1016/j.ememar.2016.09.003
DO - 10.1016/j.ememar.2016.09.003
M3 - Article
AN - SCOPUS:85008881352
SN - 1566-0141
VL - 30
SP - 96
EP - 112
JO - Emerging Markets Review
JF - Emerging Markets Review
ER -