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

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

31 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 - Mar 1 2017

Keywords

Cumulative abnormal returns
Intra industry effects
Sovereign wealth funds

ASJC Scopus subject areas

Business and International Management
Economics and Econometrics

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10.1016/j.ememar.2016.09.003

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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",

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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

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Sovereign wealth funds investment effects on target firms' competitors

Abstract

Keywords

ASJC Scopus subject areas

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