Sovereign wealth funds and equity pricing: Evidence from implied cost of equity of publicly traded targets

Sabri Boubaker, Narjess Boubakri, Jocelyn Grira, Asma Guizani

    Research output: Contribution to journalArticlepeer-review

    15 Citations (Scopus)

    Abstract

    We investigate the impact of sovereign wealth fund (SWF) investment on ex ante (implied) cost of equity capital of targeted firms. Using an international sample of 310 targets involved in 403 SWF deals and their matched firms, we find that targeted firms exhibit, on average, higher cost of equity financing than their peers after the announcement date. Firms involved in domestic deals and deals concluded during the Global Financial Crisis exhibit lower implied cost of equity financing, while those involved in cross-border deals are associated with higher implied cost of equity capital.

    Original languageEnglish
    Pages (from-to)202-224
    Number of pages23
    JournalJournal of Corporate Finance
    Volume53
    DOIs
    Publication statusPublished - Dec 2018

    Keywords

    • Cost of equity capital
    • Institutional environment
    • Sovereign wealth funds

    ASJC Scopus subject areas

    • Business and International Management
    • Finance
    • Economics and Econometrics
    • Strategy and Management

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