The investment attractiveness of companies listed on the Warsaw Stock Exchange to Sovereign Wealth Funds

Abstract

The aim of this study is to shed some light on the factors determining the investment decisions of Sovereign Wealth Funds. Using the financial data from companies listed on the Warsaw Stock Exchange, the author employs a logit model to analyse the probability that firms are targeted for investment by the Norwegian Sovereign Wealth Fund. These findings suggest that not only the growth of earnings per share increases the probability of such investment, but that also a company whose shares have been bought by the Government Pension Fund Global has, on average, a higher level of earnings per share than companies not targeted by the Fund. This study contributes to a deeper understanding of the investment activities of the world’s largest Sovereign Wealth Fund.

Sovereign wealth funds: Past, present and future

“…Overall, the academic literature shows that there is a positive association between SWF acquisition and target firms value, performance and risk (Urban, 2016;Kotter & Lel, 2011;Bortolotti et al, 2015;Fotak et al, 2008). The role and effect of large shareholdings by private, public or institutional investors on targeted firms is extensively studied in governance and finance literature.…”

“…The spectrum of discussion is very wide in term SWF investment effects on targeted firms and, political and economic motives behind their investment. Multiple studies ( Johan et al, 2013;Fotak et al, 2008;Urban, 2016) conclude that SWFs have positive effect on targeted firms as long-term investors and their investment motivations are at least partially politically biased. However, some researchers, such as Johan et al (2013) consider SWFs as activist and genuine investors like private or public pension and mutual funds.…”

“…Moreover, the literature has studied the characteristics and the individual nature of several funds (Wu & Seah, 2008;Lenihan, 2014;Cazurra et al, 2014;Bostan & Ergen, 2017;Nguyen et al, 2012;Kalyuzhnova, 2011;Abdelal, 2009), their political connections with governments (Gilson & Milhaupt, 2009;Norton, 2010;Cohen, 2009;Gilson & Milhaupt, 2009;Paltrinieri et al,. 2014a) and their investment strategies (Urban, 2016;Kotter & Lel, 2011;Bortolotti et al, 2015;Fotak et al, 2008).…”

Liquidity Profitability Dividend or Size? The Dominant Investment Criteria of Institutional Investor on the Example of Sovereing Wealth Fund

“…Keywords: sovereign wealth funds, investment, stock market, logit model Cytowanie Urban D. (2016). Płynność, rentowność, dywidenda czy wielkość?…”

Sovereign wealth funds and economic growth

“…Finally, the last and largest stream of research addresses investment strategies of SWFs. In this area, it is possible to identify studies that analyze the association between SWFs and target firm value, risk, and performance (Bertoni and Lugo 2014 ; Bortolotti et al 2015 ; Urban 2016 ; Gangi et al 2019 ) and other studies that use innovative empirical methods to analyze the investment strategies effectiveness (Miceli 2013 ; Boubakri et al 2017 Debarsy et al 2017).…”