DOI: 10.5176/2010-4804_2.3.217
Authors: Laurens Marie, Nanne Brunia and Wim Westerman
Abstract:
Since the start of the financial crisis, firms increasingly search for new finance sources. Sovereign Wealth Funds – rapidly growing government-owned investment vehicles – are investing heavily in equity nowadays. We aim to find out how stock markets respond to their investments and disinvestments. When analysing a global sample for the period January 2004 - July 2011, we find significantly positive (negative) stock market returns on the announcement of an investment (divestment). Additionally, we find that the market reacts
stronger to announcements of divestments since 2008. This provides some evidence for the idea
that investors look more favourable upon Sovereign Wealth Funds nowadays. It appears that fears for too much corporate governance impact have weakened. This opens up funding opportunities for CFO’s of today’s moneyhungry firms.
Keywords: Sovereign Wealth Funds, Firm Value, Funding
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