Sovereign Wealth Funds and Equity Pricing: Evidence from Implied Cost of Equity of Publicly Traded Target

47 Pages Posted: 3 Jan 2019 Last revised: 28 Feb 2019

See all articles by Sabri Boubaker

Sabri Boubaker

University Paris-Est Créteil (UPEC) - Institut de Recherche en Gestion

Narjess Boubakri

American University of Sharjah - School of Business and Management; HEC Montreal - Department of Finance

Jocelyn Grira

Qatar University

asma guizani

University of Monastir

Date Written: October 18, 2018

Abstract

We investigate the impact of sovereign wealth fund (SWF) investment on the 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, a 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 (GFC) exhibit a lower implied cost of equity financing, while those involved in cross-border deals are associated with a higher implied cost of equity capital.

Keywords: Sovereign Wealth Funds; Cost of Equity Capital; Institutional Environment

JEL Classification: G11; G14; G32; G34; M38

Suggested Citation

Boubaker, Sabri and Boubakri, Narjess and Grira, Jocelyn and guizani, asma, Sovereign Wealth Funds and Equity Pricing: Evidence from Implied Cost of Equity of Publicly Traded Target (October 18, 2018). Journal of Corporate Finance, Vol. 53, 2018. Available at SSRN: https://ssrn.com/abstract=3304089 or http://dx.doi.org/10.2139/ssrn.3304089

Sabri Boubaker

University Paris-Est Créteil (UPEC) - Institut de Recherche en Gestion ( email )

61 Avenue du General de Gaulle
94010 Creteil
France

HOME PAGE: http://www.irg.u-pec.fr/enseignant.php?num=58

Narjess Boubakri

American University of Sharjah - School of Business and Management ( email )

P.O. Box 26666
Sharjah
United Arab Emirates

HOME PAGE: http://www.aus.edu

HEC Montreal - Department of Finance ( email )

3000 Chemin de la Cote-Sainte-Catherine
Montreal, Quebec H3T 2A7
Canada

Jocelyn Grira (Contact Author)

Qatar University ( email )

College of Business and Economics
P.O.Box 2713
Doha, Doha 2713
Qatar
+97444035087 (Phone)

Asma Guizani

University of Monastir ( email )

Mounastir, 4100
Tunisia

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