THE IMPACT OF SOVEREIGN WEALTH FUND OWNERSHIP ON THE FINANCIAL PERFORMANCE OF FIRMS: THE EVIDENCE FROM EMERGING MARKETS


Finance

THE IMPACT OF SOVEREIGN WEALTH FUND OWNERSHIP ON THE FINANCIAL PERFORMANCE OF FIRMS: THE EVIDENCE FROM EMERGING MARKETS

Sovereign Wealth Funds (SWFs) are still considered to be new-born institutional investors, in international financial markets, as well as innovative investment vehicles, despite their relatively long history. Several funds have been operating at a global level for more than fifty years, however the number of those created after the year 2000 represents the majority of the total in existence. For many years, these state-run funds have been almost anonymous investors, existing in the shadows, maintaining a low profile in the public eye. SWFs have been regarded as investment vehicles established in order to manage, in a rational and profitoriented way, pools of national wealth for future generations.
Jméno a příjmení autora:

Dariusz Urban

Rok:
2017
Ročník:
20
Číslo:
3
Klíčová slova:
Sovereign wealth funds, institutional investor, financial performance, investing, emerging economies
DOI:
Anotace:
Sovereign Wealth Funds have been regarded as investment vehicles established in order to manage, in a rational and profit-oriented way, pools of national wealth for future generations. SWFs are among…více
Sovereign Wealth Funds have been regarded as investment vehicles established in order to manage, in a rational and profit-oriented way, pools of national wealth for future generations. SWFs are among the most important financial institutions in global financial markets, and constitute a solid element in the architecture of the international financial safety net. Similarly to other institutional investors, Sovereign Wealth Funds possess huge amounts of capital. What distinguishes them the most from other financial institutions is the fact that they are owned, managed and controlled by sovereign states, have limited liquidity needs, a lower-than-market-average-level of redemption risk, a long-term, intergenerational investment horizon and relatively high risk tolerance. The question of whether investment from Sovereign Wealth Funds determines changes in corporate financial performance of a targeted firm is still unanswered question in the literature. This study tests empirically the impact of Sovereign Wealth Funds’ ownership on the financial performance of targeted companies. Using the data of companies listed on the Warsaw Stock Exchange, we employ regression to analyze the relationship between the funds’ investment and accounting, as well as the market outcomes of the firm. The empirical findings of this research suggest that Sovereign Wealth Funds’ ownership has a positive influence on the price to book value of the firm. This article contributes to ongoing research in the field of studies related to financial aspects of SWF’s investment behavior. The empirical findings of this research can also serve as a useful reference for companies and academics concerning themselves with investment decision making in emerging markets, as well as the role of institutional investors.
Sekce:
Finance

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