Sovereign Wealth Funds and Target Firms: Does 'Networking' Matter?

Alfonso Del Giudice, Marinelli Nicoletta, Stefania Vitali

Research output: Contribution to journalArticlepeer-review

Abstract

We analyze the impact of Sovereign Wealth Fund (SWF) equity investments on target firm operating performance. We use metrics from network analysis to investigate whether target firms, that are better connected each other by means of the SWF investments, extract benefits from this network in terms of higher operating performance. We examine 507 SWF acquisition deals worldwide in the time span between 2000 and 2011. We find that more central firms in the SWF-target firm network enjoy better operating performance. In addition, our analysis points out that operating performance is higher: (i) the larger the stake acquired, (ii) if the investment is direct and domestic, (iii) if the SWF is run by a politician. Overall, our results reveal that only when a firm can benefit from the network of both political and commercial connections created by SWFs, then target firms enjoy these benefits and gain in operating performance.
Original languageEnglish
Pages (from-to)57-78
Number of pages22
JournalJOURNAL OF FINANCIAL MANAGEMENT, MARKETS AND INSTITUTIONS
DOIs
Publication statusPublished - 2014

Keywords

  • Sovereign Wealth Fund

Fingerprint

Dive into the research topics of 'Sovereign Wealth Funds and Target Firms: Does 'Networking' Matter?'. Together they form a unique fingerprint.

Cite this