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Sovereign Wealth Funds and Financial Stability-An Event Study Analysis
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Author/Editor: |
Sun, Tao | Hesse, Heiko |
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October 1, 2009 |
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Electronic Access: |
Free Full Text (PDF file size is 941KB)
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.
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Summary: This paper examines financial stability issues that arise from the increased presence of sovereign wealth funds (SWFs) in global financial markets by assessing whether and how stock markets react to the announcements of investments and divestments to firms by SWFs using an event study approach. Based on 166 publicly traceable events collected on investments and divestments by major SWFs during the period from 1990 to 2009, the paper evaluates the short-term financial impact of SWFs on selected public equity markets in which they invest. The impact is analyzed on different sectors (financial and nonfinancial), actions (buy and sell), market types (developed and emerging markets), and level of corporate governance (high and low score). Results, based on these 166 events, show that there was no significant destabilizing effect of SWFs on equity markets, which is consistent with anecdotal evidence.
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Series: |
Working Paper No. 09/239 |
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Subject(s): |
Asset management | Asset prices | Capital markets | Corporate governance | Developed countries | Domestic investment | Emerging markets | Financial institutions | Financial stability | Sovereign wealth funds |
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Author's keyword(s): |
Sovereign Wealth Funds | Financial Stability | Event Study | Governance |
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Published: |
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October 1, 2009 |
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Format: |
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Paper |
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Stock No: |
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WPIEA2009239 |
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Pages: |
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17 |
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Price: |
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US$18.00 (Academic Rate: US$18.00 )
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