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

Boubaker, Sabri; Boubakri, Narjess; Grira, Jocelyn; Guizani, Asma

doi:10.1016/j.jcorpfin.2018.10.007

Cited by 39 publications

(33 citation statements)

References 58 publications

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“…Consistent with Boubakri et al (2012), Fu et al (2012), Chen et al (2016) and Pham (2019), the market-to-book ratio (MTB) is negatively related to the implied cost of equity. A higher volatility in returns (VOLATILITY) is associated with a larger implied cost of equity, as documented in Hail and Leuz (2009), Boubakri et al (2012) and Boubaker et al (2018). The positive association between leverage (LEVERAGE) and the implied cost of equity is consistent with Boubakri et al (2012), Chen et al (2016) and Boubaker et al (2018).…”

Section: Baseline Modelssupporting

confidence: 53%

“…A higher volatility in returns (VOLATILITY) is associated with a larger implied cost of equity, as documented in Hail and Leuz (2009), Boubakri et al (2012) and Boubaker et al (2018). The positive association between leverage (LEVERAGE) and the implied cost of equity is consistent with Boubakri et al (2012), Chen et al (2016) and Boubaker et al (2018). Larger and more profitable firms are able to raise external capital at a lower cost (Boubakri et al, 2012;Pham, 2019).…”

Section: Baseline Modelsmentioning

confidence: 56%

“…We report novel evidence on the effect of SSO membership on a firm's cost of equity capital. The implied cost of equity reflects the rate of return investors require, and so represents a crucial input to long-term investment decisions (Boubaker et al, 2018). Understanding of how engagement with standard setting affects investors' perceptions of a firm's riskiness has far-reaching implications for corporate strategic and financial planning.…”

Section: Discussionmentioning

confidence: 99%

See 2 more Smart Citations

Participation in Setting Technology Standards and the Implied Cost of Equity

Deng¹,

Mateut

2021

SSRN Journal

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Section: Baseline Modelssupporting

confidence: 53%

Section: Baseline Modelsmentioning

confidence: 56%

Section: Discussionmentioning

confidence: 99%

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Participation in Setting Technology Standards and the Implied Cost of Equity

Deng¹,

Mateut

2021

SSRN Journal

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“…Naturally, these measures are likely to enhance the overall profitability of the target firm [14]. Boubaker et al (2018) also report on the benefits of SWF investments for domestic firms. Using an international sample of 403 SWF deals, they find that the implied cost of equity financing reduces after SWF investment when the target firm is located domestically but not when the firm is located abroad.…”

Section: Impact and Implications Of Swfsmentioning

confidence: 99%

The impact and implications of SWFs: a systematic review of literature

Garg

Shukla

2021

QRFM

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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.

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“…Botosan (2006) states that the minimum return required by investors / shareholders to be willing to reinvest their capital into the company is the cost of equity (Falah & Meiranto, 2017). Therefore, the cost of equity affects the financial companies that affect firm value as in research related to the cost of equity in domestic companies that are smaller than outside companies (Boubaker, Boubakri, Grira, & Guizani, 2018), Corporate Social Responsibility (CSR) activities (Breuer, Müller, Rosenbach, & Salzmann, 2018), on the application of management's responsibility for financial reports (MRF) (Bangmek, Yodbutr, & Thanjunpong, 2018), investment in information technology (Dow, Watson, & Shea, 2017), and control of shareholders (Guo, Li, Jiao, & Wang, 2019). Based on this, the amount of cost of equity affects the firm value of a company.…”

Section: Introductionmentioning

confidence: 99%

Untitled

2020

EJBIR

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This study aims to analyze the effect of non-financial measures, independent board of commissioners, and audit quality on firm value, with the cost of equity as a moderating variable. The method used in this research is descriptive and verification methods. The data source is secondary data from the annual reports of manufacturing companies in the 2013-2016 period which are listed on the Indonesia Stock Exchange as many as 97 companies with 388 companies. The results showed that there are non-financial measures of customer perspective and internal process perspective, independent board of commissioner, and audit quality significantly influence firm value. Cost of equity as a moderating variable makes the influence of the independent board of commissioner weak against firm value. While the growth and learning perspective variables do not really affect the firm value. Cost of equity strengthens the influence of non-financial measures customer perspective on firm value, while in the internal process perspective, growth and learning of non-financial measures and audit quality are weak. The cost of equity will strengthen variables that can support the wishes of shareholders and will weaken variables that are independent of board of commissioner and audit quality. Other results require large costs to increase firm value. Firm value can be increased by increasing non-financial activities, the number of independent board of commissioner shares and conducting audit quality by reducing the amount of cost of equity that can weaken the value of firm value.

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

Cited by 39 publications

References 58 publications

Participation in Setting Technology Standards and the Implied Cost of Equity

Participation in Setting Technology Standards and the Implied Cost of Equity

The impact and implications of SWFs: a systematic review of literature

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