Sovereign wealth funds investment effects on target firms' competitors

Narjess Boubakri, Jean-Claude Cosset and Jocelyn Grira

Emerging Markets Review, 2017, vol. 30, issue C, 96-112

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: Sovereign wealth funds; Intra industry effects; Cumulative abnormal returns (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:30:y:2017:i:c:p:96-112

DOI: 10.1016/j.ememar.2016.09.003

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