Understanding the decision-making process of sovereign wealth funds: The case of Temasek
Jean-Yves Gnabo (),
Malik Kerkour (),
C. Lecourt and
Additional contact information
C. Lecourt: GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - EHESS - École des hautes études en sciences sociales
Post-Print from HAL
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.
Note: View the original document on HAL open archive server: https://hal-amu.archives-ouvertes.fr/hal-01685389
References: Add references at CitEc
Citations: Track citations by RSS feed
Published in Handbook of International Economics, Elsevier, 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.
Journal Article: Understanding the decision-making process of sovereign wealth funds: The case of Temasek (2017)
Working Paper: Understanding the Decision Making Process of Sovereign Wealth Funds: The Case of Temasek (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01685389
Access Statistics for this paper
More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().