Does political risk matter for sovereign wealth funds? International evidence

Jocelyn Grira, Chiraz Labidi and Wael Rouatbi

International Review of Financial Analysis, 2022, vol. 81, issue C

Abstract: We investigate the impact of political risk on the investment decisions of sovereign wealth funds (SWFs). Using an international sample of 302 targets involved in 427 SWFs' deals, we find that political risk matters in determining SWFs' portfolio strategies. Among the four dimensions of political risk, we show that conflicts and democratic tendencies are the main components that explain variations in SWF behaviour, whereas the quality of institutions and government action matter less. Our results are robust to a battery of sensitivity tests, alternative model specifications, subsample analysis, and cultural bias.

Keywords: Sovereign wealth funds; Political risk; Conflicts; Quality of institutions; Democratic tendencies (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1057521918301467
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:81:y:2022:i:c:s1057521918301467

DOI: 10.1016/j.irfa.2018.07.013

Access Statistics for this article

International Review of Financial Analysis is currently edited by B.M. Lucey

More articles in International Review of Financial Analysis from Elsevier
Bibliographic data for series maintained by Catherine Liu ().