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Book part
Publication date: 27 September 2011

Elvira Sojli and Wing Wah Tham

Purpose – Study the role of sovereign wealth funds (SWFs) as an example of foreign and politically connected large shareholders, and their impact on firm value.…

Abstract

Purpose – Study the role of sovereign wealth funds (SWFs) as an example of foreign and politically connected large shareholders, and their impact on firm value.

Methodology/approach – Use a sample of SWF large U.S. investments where SWFs intend to actively engage with management to analyze not only whether but also why SWF investments outperform the market in both the short- and long term from the perspective of internationalization, political connections, and corporate governance.

Findings – Foreign and politically connected large investors, like SWFs, improve firm value through the provision of SWF domestic market access and government-related contracts. In the short run, the market welcomes SWF investments in expectation of potential monitoring and internationalization benefits. In the long run, the target firms’ degree of internationalization and Tobin's q increase substantially after SWF investments. The increase in q is directly related to the number of government-related contracts granted by SWF countries.

Social implications – SWF investment benefits appear to outweigh the costs for firm value and shareholders. The results point to the benefits of large and foreign investors for shareholders.

Originality/value of paper – This is the first work to provide evidence on how foreign government-related shareholders can affect firm value.

Details

Institutional Investors in Global Capital Markets
Type: Book
ISBN: 978-1-78052-243-2

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Article
Publication date: 4 February 2014

Harry McVea and Nicholas Charalambu

The purpose of this article is to assess strategies available to recipient states for managing the putative risks posed by sovereign wealth funds (SWFs) in the context of…

Abstract

Purpose

The purpose of this article is to assess strategies available to recipient states for managing the putative risks posed by sovereign wealth funds (SWFs) in the context of global, liberalized, and capital markets.

Design/methodology/approach

The paper employs a game theory analysis in assessing these risks. Four basic scenarios are outlined whereby recipient states may interact with SWFs: “unselfish recipient state – unselfish SWF” (Option 1); “unselfish recipient state – Selfish SWF” (Option 2); “Selfish Recipient State – unselfish SWF” (Option 3); and “Selfish Recipient State – Selfish SWF” (Option 4).

Findings

In the light of this analysis, and the balance of risks which the authors perceive recipient states are exposed to in practice, the authors claim that recipient states ought, rationally, to adopt a selfish regulatory strategy irrespective of the strategy which SWFs adopt in practice.

Originality/value

This claim does not deny the importance of voluntary international measures – such as the “Santiago principles” – in the way SWFs are regulated. Rather, it seeks to show that according to a game theory analysis, and an attempted application of that analysis in practice, undue reliance by recipient states on international “soft law” regulatory initiatives to regulate SWF activity (which constitutes the current international consensus) is strategically unwise.

Details

Journal of Financial Regulation and Compliance, vol. 22 no. 1
Type: Research Article
ISSN: 1358-1988

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Article
Publication date: 25 January 2013

Yiwen Fei, Xichi Xu and Rong Ding

The purpose of this research is to empirically analyze the influence of the financial crisis on the investment behavior of sovereign wealth funds (SWFs).

Abstract

Purpose

The purpose of this research is to empirically analyze the influence of the financial crisis on the investment behavior of sovereign wealth funds (SWFs).

Design/methodology/approach

Using 615 deals from 20 SWFs, a series of research are designed and conducted to compare the SWFs' governance, external environment, investment strategy and financial markets' feedback around the crisis.

Findings

The paper finds that the recent financial crisis did not only bring SWFs heavy losses and the pressure to improve its image and governance structure, but also a precious opportunity of a better external environment by easing the nerves of the recipient country's government. Their investment strategies will be more positive, diversified and complementary to their own real economy. The event studies illustrate that financial markets turn to be more effective after the crisis. The market reaction to SWF's investment tends to mitigate speculative trading to a larger extent, which is shown by the lower cumulative abnormal return and turnover volatility.

Originality/value

This paper tries to test the change of SWFs' behavior pro‐ and post‐crisis. It reveals that SWFs have changed their effects on SWF's home country, SWF's host country, the financial market and the real economy after the financial crisis, which is helpful for government and institutions to maintain the stability of the national economy and security market.

Details

China Finance Review International, vol. 3 no. 1
Type: Research Article
ISSN: 2044-1398

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Article
Publication date: 29 September 2021

Roshni Garg and Abha Shukla

This paper aims to systematically review all available evidence on the implications of sovereign wealth funds (SWFs) for various stakeholders (recipients of sovereign…

Abstract

Purpose

This paper aims to systematically review all available evidence on the implications of sovereign wealth funds (SWFs) for various stakeholders (recipients of sovereign investment, home countries, which incorporate SWFs and the world at large) and offer future research directions.

Design/methodology/approach

A systematic literature review (SLR) technique is used to review 102 handpicked articles for the period 2005‐2019.

Findings

This review reveals that the literature on the impact of SWFs emerged only during the financial crisis of 2008–2011 and much of it is qualitative in nature. The literature is lopsidedly focused on the impact of SWFs on target firms and there has been a limited empirical investigation of the impact on other stakeholders. There is a lack of consensus in several areas, which calls for additional research. Few areas, which have not been addressed in the literature and can be taken up by future researchers include the impact of SWFs on macroeconomic fundamentals and stock markets of recipient countries, especially emerging economies; implications of SWFs for alternative asset classes; impact on the welfare of citizens and internationalization strategies of home countries; impact on initial public offerings and unlisted corporations; and impact on innovativeness, efficiency and corporate governance practices of target firms.

Originality/value

To the best of the authors’ knowledge, this is the first paper to use the SLR technique to review the literature on SWFs. It considers the impact of SWFs on all stakeholders and covers both qualitative and quantitative literature published over a long period of 2005‐2019. It also systematizes all available evidence on this theme and identifies important research gaps, which may be helpful for academicians, practitioners and policymakers.

Details

Qualitative Research in Financial Markets, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1755-4179

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Article
Publication date: 18 June 2019

Georgios Pavlidis

This paper aims to investigate the idea of building responsible borrowing and lending into sovereign wealth fund (SWF) decision-making. SWFs, which currently manage US$8…

Abstract

Purpose

This paper aims to investigate the idea of building responsible borrowing and lending into sovereign wealth fund (SWF) decision-making. SWFs, which currently manage US$8 trillion in assets, are influential institutional investors, but their role in sovereign debt markets needs to be further explored. In this context, this paper aims to critically assess the linkages and convergences between the Santiago Principles on SWF and the United Nations Conference on Trade and Development (UNCTAD) principles on responsible sovereign lending and borrowing.

Design/methodology/approach

This paper draws on legal scholarship, reports, policy papers and other open-source data to explore the role of SWFs in sovereign lending, borrowing and debt restructuring.

Findings

Building responsible borrowing and lending into SWF decision-making is feasible and justified on the grounds of both ethics and public duty. It is also justified in financial terms because it would protect SWFs from irresponsible lending and borrowing practices at the micro level while contributing to global financial stability at the macro level.

Originality/value

This is the first comprehensive study to juxtapose two important normative processes, the Santiago Principles and the UNCTAD Principles.

Details

Journal of Financial Regulation and Compliance, vol. 27 no. 4
Type: Research Article
ISSN: 1358-1988

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Article
Publication date: 15 February 2013

Salar Ghahramani

The purpose of this paper is to examine the propensity of sovereign wealth funds (SWFs) for shareholder activism and their potential impact on corporate governance.

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Abstract

Purpose

The purpose of this paper is to examine the propensity of sovereign wealth funds (SWFs) for shareholder activism and their potential impact on corporate governance.

Design/methodology/approach

The study highlights the relationships between SWFs and corporate governance and also applies eight antecedents/determinants of institutional activism to analyze whether SWFs have a predisposition for shareholder activism.

Findings

The study only finds two instances of SWF activism. Additionally, it finds that despite their mostly passive investments, SWFs possess a natural tendency toward shareholder activism. Some are more likely to engage in activism than others, however. SWFs with a higher proportion of their assets invested in equities, those with portfolios fully or partially constructed to emulate the broader financial markets through indexing, and those that depend less on external fund managers are the likeliest candidates for activism. The study also finds that the regulatory environment can curb the natural SWF inclination for activist behavior.

Research limitations/implications

Due to the lack of transparency within the SWF universe, this study largely depends on the limited data available for sovereign wealth funds.

Practical implications

Given the growing importance of SWFs, managers, directors, and policymakers must assess SWF activism, its influence on corporate governance, and its implications for public policy deliberations.

Originality/value

This project, to the best of the author's knowledge, is the first study that applies tested financial models to SWFs in order to determine if they have inherent activist tendencies.

Details

Corporate Governance: The international journal of business in society, vol. 13 no. 1
Type: Research Article
ISSN: 1472-0701

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Book part
Publication date: 27 September 2011

Rolando Avendaño and Javier Santiso

Purpose – To study the allocation in equity markets of sovereign wealth funds’ (SWF) investments with respect to other institutional investors. To analyze the role of…

Abstract

Purpose – To study the allocation in equity markets of sovereign wealth funds’ (SWF) investments with respect to other institutional investors. To analyze the role of political regimes in the sending and recipient countries as a determinant of the allocation of SWF investments.

Methodology/approach – We use mutual funds’ investments as a benchmark for SWF investment allocations. We collect data of SWF and mutual fund equity investments at the firm level and analyse them on a geographical and sector basis. We compare target investments for these two groups by looking at the political regime in the sending and recipient country, using different political indicators (Polity IV, Bertelsmann). We provide a comparison of SWFs and pension funds based on governance features related to investment.

Findings – We find that the fear that sovereigns with political motivations use their financial power to secure large stakes in OECD countries is not confirmed by the data. SWF investment decisions do not differ greatly from those of other wealth managers. Although there can be differences in the allocation, political regimes in the recipient countries do not play a role in explaining the allocation of sovereign wealth funds.

Social implications – Investment from public institutions, such as sovereign wealth funds, can have significant implications at the economic and social level. Sovereign funds are potential sources of capital for emerging economies, and therefore can enchance economic growth. It is important to understand to what extent public institutional investors behave differently from private investors. The “political bias” is not a relevant factor for sovereign funds, or for other institutional investors, for allocating their capital. More often than not, their asset allocation strategies converge with other large investors, these being driven by financial and not political bias.

Originality/value of the chapter – The chapter is an original contribution providing a firm-level analysis of equity holdings for two groups of institutional investors. Moreover, it emphasizes the political dimension of institutional investments, highlighting the priorities and constraints of public investors participating in financial markets. The chapter suggests that SWFs do not discriminate by the political regime of the recipient country in their asset allocation.

Details

Institutional Investors in Global Capital Markets
Type: Book
ISBN: 978-1-78052-243-2

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Article
Publication date: 14 July 2020

Yang Ke and Jun Xiong

This paper aims to introduce a novel concept of a double-wire feed (DWF) to alleviate heat accumulation and improve the cooling rate of the molten pool in gas tungsten arc…

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120

Abstract

Purpose

This paper aims to introduce a novel concept of a double-wire feed (DWF) to alleviate heat accumulation and improve the cooling rate of the molten pool in gas tungsten arc (GTA)-based additive manufacturing (AM), in which the former wire is fed into the arc and the latter wire is melt by the molten pool.

Design/methodology/approach

The microstructure, phase composition and mechanical properties of 308 L stainless steel components built by single-wire feed (SWF) AM and DWF-AM are compared, and the differences are analyzed in detail.

Findings

The microstructures for both wire feeding modes include δ and γ phases. Compared with the SWF-AM, the sample fabricated in the DWF-AM exhibits finer microstructure, and the microstructure in the middle region is transformed from columnar grains to cellular grains. Microhardness of the sample produced in the DWF-AM is higher than the SWF-AM. In comparison to the SWF-AM, the tensile strength of the specimen fabricated using the DWF-AM reaches 571 MPa and increases by 16.14%.

Originality/value

This study proposes a novel concept of the DWF-AM to reduce heat accumulation as well as enhance the cooling rate of the molten pool, and improved mechanical properties of the 308 L stainless steel component are obtained.

Details

Rapid Prototyping Journal, vol. 26 no. 9
Type: Research Article
ISSN: 1355-2546

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Article
Publication date: 6 May 2014

Ishmael Owiredu, Damian Laryea and John Barimah

– The aim of this paper is to promote the utilization and diversification of cashew nuts through its use as a substitute for wheat flour in biscuit production.

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337

Abstract

Purpose

The aim of this paper is to promote the utilization and diversification of cashew nuts through its use as a substitute for wheat flour in biscuit production.

Design/methodology/approach

Wheat flour was substituted with cashew nut flour (CNF) at levels of 0, 20, 30 and 40 percent in the production of biscuit. The products obtained were subjected to proximate, mineral and sensory analysis.

Findings

There was a significant increase in protein and fat contents from 7.75 and 22.11 percent to 12.89 and 32.11 percent, respectively, when CNF increased, whiles carbohydrate decreased from 66.67 to 48.04 percent. A significant increase in magnesium (27.93-97.03 mg/100 g), sodium (198.11-228.02 mg/100 g), phosphorus (55.90-149.00 mg/100 g), potassium (290.40-990.00 mg/100 g), zinc (0.72-2.00 mg/100 g) and iron (0.28-1.00 mg/100 g) was also observed as CNF increased. Sensory analysis revealed that there was no significant difference (p>0.05) between the 20 and 30 percent substituted samples, in terms of overall acceptability. Therefore, wheat flour could be substituted with CNF up to 30 percent in the production of biscuit.

Originality/value

This study was done to ascertain the potential use of CNF as a substitute for wheat flour and a nutrient enrichment in biscuit production, in order to diversify its use; since it still remains an underutilized raw material in Ghana.

Details

Nutrition & Food Science, vol. 44 no. 3
Type: Research Article
ISSN: 0034-6659

Keywords

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Article
Publication date: 28 July 2021

Sivakumar Velayutham and Rashedul Hasan

The purpose of this paper is to critically discuss the participation of sovereign wealth funds (SWFs) in the corporate social responsibility (CSR) programmes. Sovereign…

Abstract

Purpose

The purpose of this paper is to critically discuss the participation of sovereign wealth funds (SWFs) in the corporate social responsibility (CSR) programmes. Sovereign wealth funds in emerging economies are often involved in corporate social responsibility. However, the 1 Malaysian Development Berhad (1MDB) scandal illustrates the possible use of SWF as a vehicle for corruption and abuse.

Design/methodology/approach

The primary objective is to develop good governance practices of CSR by SWFs that could limit corrupt practices. A case study approach is adopted to investigate the CSR involvement of two SWFs – Norway’s Government Pension Fund Global (GPFG) and Abu Dhabi Fund for Development (ADFD).

Findings

The finding shows that SWFs should not be directly involved in CSR. It is proposed that independent Non-government Organisations (NGOs), through a competitive funding model, could serve the CSR purpose of SWFs more effectively and bring socio-economic changes in emerging economies.

Originality/value

The funding model identifies the expected outcomes, priorities and uses of the funds. The funding committee should also be independent of the Board and transparent in its allocations.

Details

Public Administration and Policy, vol. 24 no. 2
Type: Research Article
ISSN: 1727-2645

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