Does Geopolitics Affect the Choice of Acquisitions of Sovereign Wealth Firms?
An interesting but largely intuitive take on how geopolitics affects the acquisitions of sovereign wealth funds (SWFs) using in part our risk data from the International Country Risk Guide (ICRG).
Utilizing novel big-data measures of cooperative and adversarial relations based on media reporting and three different tests, the authors of this published piece in the Journal of International Business Studies examined over 5800 cross-border acquisitions by SWFs and private firms, finding that that home-host conflict hinders SWFs more than private firms.
Hence, despite SWFs’ lack of managerial control of target firms, state ownership moderates geopolitical influences on their internationalization and makes them more sensitive than private firms to interstate relations. The findings suggest that government concern over FDI by state entities goes beyond their operational activities.
Journal of International Business Studies (2021) 52, 1238-1255.
https//doi.on/10.1057/s41267-021-00415-4
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