EconPapers    
Economics at your fingertips  
 

Understanding the decision-making process of sovereign wealth funds: The case of Temasek

Jean-Yves Gnabo, Malik Kerkour, C. Lecourt and Helene Raymond
Additional contact information
C. Lecourt: GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique

Post-Print from HAL

Abstract: Sovereign wealth funds (SWFs) have been increasingly active over the past decade, with governments raising concern regarding their actual motives and the potential for cross-border interest in national strategic sectors. The aim of this paper is to contribute to the existing literature by improving our understanding of the decisions being taken by this new class of investors. The decision-making process informing such investments is complex in the sense that it involves several levels of decision that may potentially interact. In this study, we investigate the determinants of SWFs' foreign investments, while considering in a single model the sequence of choices involved in their decisions, specifically (i) the decision to invest abroad or not, (ii) the decision to invest in a listed versus unlisted firm, and (iii) the decision to take large versus small stakes. Using a nested logit approach on one of the largest SWFs, the Singaporean fund Temasek, over the period 1990–2010, we provide clear evidence of dependence in the three levels of decision making considered. In addition, we show that the probability of Temasek's cross-border investment increases with the excess of foreign exchange (FX) reserves, that the SWF tends to target unlisted firms when asymmetry of information is low between the target company and its home country, and that its involvement in large stakes depends on a firm's financial characteristics.

Date: 2017-12
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Published in Handbook of International Economics, 2017, 152, pp.91 - 106. ⟨10.1016/j.inteco.2017.06.003⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Understanding the decision-making process of sovereign wealth funds: The case of Temasek (2017) Downloads
Working Paper: Understanding the Decision Making Process of Sovereign Wealth Funds: The Case of Temasek (2016) Downloads
Working Paper: Understanding the Decision Making Process of Sovereign Wealth Funds: The Case of Temasek (2016) Downloads
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:hal:journl:hal-01685389

DOI: 10.1016/j.inteco.2017.06.003

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().

 
Page updated 2025-03-19
Handle: RePEc:hal:journl:hal-01685389