Sovereign Wealth Funds’ Affiliation and Acquisition Premium: Evidence from the Asia-Pacific Region
This study aims to extend the signaling theory, by offering the buy-side sovereign wealth fund’s (SWF) affiliation as a signal of the acquisition premium. Using the mergers and acquisitions (M&As) deals’ data from Asia-Pacific, over the period from 2000-2017, theresults reveal that the effect o...
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| Format: | Article |
| Language: | English |
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Lahore School of Economics
2019-10-01
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| Series: | The Lahore Journal of Business |
| Subjects: | |
| Online Access: | https://journals.lahoreschool.edu.pk/LJB/LJB/article/view/81 |
| _version_ | 1826533968187490304 |
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| author | Ali Awais Khalid Ghulame Rubbaniy Muhammad Faisal Rizwan Hassan Rauf Chaudhry |
| author_facet | Ali Awais Khalid Ghulame Rubbaniy Muhammad Faisal Rizwan Hassan Rauf Chaudhry |
| author_sort | Ali Awais Khalid |
| collection | DOAJ |
| description |
This study aims to extend the signaling theory, by offering the buy-side sovereign wealth fund’s (SWF) affiliation as a signal of the acquisition premium. Using the mergers and acquisitions (M&As) deals’ data from Asia-Pacific, over the period from 2000-2017, theresults reveal that the effect of buy-side SWF’s affiliation, on the acquisition premium of target firms is negative, and statistically significant in the North Asian region. Our cross-country analysis shows a negatively significant effect of the buy-side SWF’s affiliation on the acquisition premium in China. The findings of our sectoral analysis report a significantly adverse effect of SWF’s affiliation on the acquisition premium in the energy and cyclical goods sector. This suggests that the SWFs are likely to be more influential in M&As deals that are conducted in the strategic sectors. Our findings demonstrate that the buy-side SWF’s affiliation can be used as a signal of quality. That is to say that this affiliation increases the bargaining power of buyers to reduce the acquisition premium for targets. The findings are particularly important for the managers of firms managing SWFs’ investments, as they can negotiate better deals with the targets due to the managers’ affiliation with the SWFs.
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| first_indexed | 2025-03-14T02:15:33Z |
| format | Article |
| id | doaj.art-afff9f652e5b49c9aa971eee3057dc6d |
| institution | Directory Open Access Journal |
| issn | 2223-0025 2791-3139 |
| language | English |
| last_indexed | 2025-03-14T02:15:33Z |
| publishDate | 2019-10-01 |
| publisher | Lahore School of Economics |
| record_format | Article |
| series | The Lahore Journal of Business |
| spelling | doaj.art-afff9f652e5b49c9aa971eee3057dc6d2025-03-11T18:18:44ZengLahore School of EconomicsThe Lahore Journal of Business2223-00252791-31392019-10-0181Sovereign Wealth Funds’ Affiliation and Acquisition Premium: Evidence from the Asia-Pacific RegionAli Awais Khalid0Ghulame Rubbaniy1Muhammad Faisal Rizwan2Hassan Rauf Chaudhry3 Lahore Business School, The University of Lahore, Lahore, Pakistan. Associate Professor, College of Business, Zayed University, PO Box 144534, Khalifa City, Abu Dhabi, UAE. Assistant Professor, Faculty of Management Sciences, International Islamic University, Islamabad, PakistanAssistant Professor, UCP Business School, University of Central Punjab, Lahore, Pakistan This study aims to extend the signaling theory, by offering the buy-side sovereign wealth fund’s (SWF) affiliation as a signal of the acquisition premium. Using the mergers and acquisitions (M&As) deals’ data from Asia-Pacific, over the period from 2000-2017, theresults reveal that the effect of buy-side SWF’s affiliation, on the acquisition premium of target firms is negative, and statistically significant in the North Asian region. Our cross-country analysis shows a negatively significant effect of the buy-side SWF’s affiliation on the acquisition premium in China. The findings of our sectoral analysis report a significantly adverse effect of SWF’s affiliation on the acquisition premium in the energy and cyclical goods sector. This suggests that the SWFs are likely to be more influential in M&As deals that are conducted in the strategic sectors. Our findings demonstrate that the buy-side SWF’s affiliation can be used as a signal of quality. That is to say that this affiliation increases the bargaining power of buyers to reduce the acquisition premium for targets. The findings are particularly important for the managers of firms managing SWFs’ investments, as they can negotiate better deals with the targets due to the managers’ affiliation with the SWFs. https://journals.lahoreschool.edu.pk/LJB/LJB/article/view/81Asymmetric informationsignaling theorysovereign wealth funds (SWFs)Generalized estimating equationmergers and acquisitions |
| spellingShingle | Ali Awais Khalid Ghulame Rubbaniy Muhammad Faisal Rizwan Hassan Rauf Chaudhry Sovereign Wealth Funds’ Affiliation and Acquisition Premium: Evidence from the Asia-Pacific Region The Lahore Journal of Business Asymmetric information signaling theory sovereign wealth funds (SWFs) Generalized estimating equation mergers and acquisitions |
| title | Sovereign Wealth Funds’ Affiliation and Acquisition Premium: Evidence from the Asia-Pacific Region |
| title_full | Sovereign Wealth Funds’ Affiliation and Acquisition Premium: Evidence from the Asia-Pacific Region |
| title_fullStr | Sovereign Wealth Funds’ Affiliation and Acquisition Premium: Evidence from the Asia-Pacific Region |
| title_full_unstemmed | Sovereign Wealth Funds’ Affiliation and Acquisition Premium: Evidence from the Asia-Pacific Region |
| title_short | Sovereign Wealth Funds’ Affiliation and Acquisition Premium: Evidence from the Asia-Pacific Region |
| title_sort | sovereign wealth funds affiliation and acquisition premium evidence from the asia pacific region |
| topic | Asymmetric information signaling theory sovereign wealth funds (SWFs) Generalized estimating equation mergers and acquisitions |
| url | https://journals.lahoreschool.edu.pk/LJB/LJB/article/view/81 |
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