Corporate Governance: The Role of Sovereign Wealth Funds as Blockholders



Using a large hand-collected data set from 1996 to 2006, we find that Sovereign Wealth Funds (SWFs) and their investment arms engage in blockholder activism through proposal of strategic, operational, and financial remedies. SWFs seldom seek control and in most cases are non-confrontational. The abnormal return around the announcement of activism is approximately 9%, with no reversal during the subsequent year. Target firms experience substantial increase in share price during the SWF holding period, as a result of improved management after activism. Our analysis provides important new evidence about the role of SWFs in informed shareholder monitoring.
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Sebastian Gryglewicz