Sovereign wealth funds investment effects on target firms' competitors

Narjess Boubakri, Jean Claude Cosset, Jocelyn Grira

    Research output: Contribution to journalArticlepeer-review

    21 Citations (Scopus)

    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.

    Original languageEnglish
    Pages (from-to)96-112
    Number of pages17
    JournalEmerging Markets Review
    Volume30
    DOIs
    Publication statusPublished - Mar 1 2017

    Keywords

    • Cumulative abnormal returns
    • Intra industry effects
    • Sovereign wealth funds

    ASJC Scopus subject areas

    • Business and International Management
    • Economics and Econometrics

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