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

Sabri Boubaker, Narjess Boubakri, Jocelyn Grira and Asma Guizani

Journal of Corporate Finance, 2018, vol. 53, issue C, 202-224

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.

Keywords: Sovereign wealth funds; Cost of equity capital; Institutional environment (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:53:y:2018:i:c:p:202-224

DOI: 10.1016/j.jcorpfin.2018.10.007

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