TY - JOUR
T1 - Understanding the decision-making process of sovereign wealth funds
T2 - The case of Temasek
AU - Gnabo, J. Y.
AU - Kerkour, M.
AU - Lecourt, C.
AU - Raymond, H.
N1 - Funding Information:
PGC has reported advisory roles for Deciphera Pharmaceuticals, Eisai, Eli Lilly, Nektar Therapeutics, speaker’s honoraria from Eisai, Eli Lilly, Pfizer, PharmaMar, and conducted studies sponsored by Amgen Dompé, AROG Bayer, Blueprint Medicines, Eli Lilly, Daiichi Sankyo Pharma, Epizyme, GlaxoSmithKline, Novartis, Pfizer, PharmaMar; SBa has reported research support from Novartis, Incyte, Blueprint Medicines, has received honoraria or consultation fees from Novartis, Lilly, Pfizer, PharmaMar and Bayer; SBi has reported advisory/consultant roles for Lilly, Bayer, Pfizer, Novartis, Isolfol and Clinigen and conducted studies sponsored by Janssen-Cilag, Eisai and Loxo Oncology; SBo has reported honoraria and travel grants from Nanobiotix and Lilly and received travel grants from PharmaMar; IB has received research funds from Bristol-Myers Squibb, Merck Sharp & Dohme, Novartis, Roche, Amgen and has reported advisory roles for AstraZeneca, Roche, Merck Sharp & Dohme, LEO Pharma, Amgen, Bristol-Myers Squibb, Pfizer and Novartis; TB has reported honoraria from Roche and PharmaMar and advisory board and honoraria from Amgen, Bayer, Novartis, Eisai and Eli Lilly; JMB has reported consulting advisory role for PharmaMar, Lilly, Bayer, Novartis and being a member of the speaker’s bureau for PharmaMar and received travel grants from PharmaMar and Lilly; APDT is a member of the speakers' bureau for Lilly, Pfizer and Merck Sharp & Dohme; XGDM has reported advisory role for Lilly, PharmaMar and Novartis; PD has reported conducted research sponsored by Eli Lilly; ME has participated in advisory boards for Bayer, Sobi, Lilly, Eisai and Novartis; AMF has conducted studies sponsored by Amgen Dompé, AROG Bayer, Blueprint Medicines, Eli Lilly, Daiichi Sankyo Pharma, Epizyme, GlaxoSmithKline, Novartis, Pfizer, PharmaMar; SG has received research grants and honoraria from Novartis, Pfizer and Bayer; HG has received research grants from Novartis, Daiichi Sankyo Pharma and Pfizer; AG has reported compensation for advisory boards from Novartis, Pfizer, Bayer, Lilly, PharmaMar and Nanobiotix, honoraria from Novartis, Lilly, PharmaMar and Nanobiotix, and research funds from PharmaMar and travel grants from PhramaMar and Nanobiotix; BH has received research grants from EuroSarc and has conducted research with EIT Health in collaboration with GE healthcare and Philips, he has received reagents from Takeda and Astellas to conduct clinical trials without direct funding; PH has reported conducting research sponsored by Novartis, Blueprint Medicines, Nanobiotix and Lilly and has received honoraria and travel grants from PharmaMar, Eisai and Lilly; HJ has reported co-appointment with Orion Pharma and holds stock in Sartar Therapeutics, Faron Pharmaceuticals and Orion Pharma; RLJ is a consultant for Adaptimmune, Blueprint Medicines, Clinigen, Eisai, Epizyme, Daichii, Deciphera, Immunedesign, Lilly, Merck and PharmaMar; IJ has received honoraria from Lilly for lectures; PJ has reported being a consultant for Stryker for the design of a new tumour prosthesis; BK has reported honoraria from Novartis, Pfizer and Bayer and advisory role for Bayer; KK has received travel grants from Novartis and Pfizer; ALC has received honoraria from Pfizer, Novartis, Lilly, Amgen, Bayer and PharmaMar; Pfizer and Bayer; IL has received honoraria from Bristol-Myers Squibb, MDS, Roche, Novartis and Pfizer for scientific presentations or research; MAP has served on advisory boards for Bayer and Pfizer, and has received research grants from Novartis; PRe has served on advisory boards for Novartis, Pfizer, PharmaMar, Ariad, Merck, Deciphera, Roche, Clinigen and Lilly and has received honoraria from Novartis, Pfizer, Bayer, PharmaMar and Lilly; PRu has received honoraria for lectures from Novartis, Pfizer, Bristol-Myers Squibb, Merck Sharp & Dohme, Roche and has served as a member of advisory board for Novartis, Amgen, Merck Sharp & Dohme, Bristol-Myers Squibb, Blueprint Medicines; PS has received honoraria from Daiichi Sankyo Pharma, Eisai, Eli Lilly, Medspace, Novartis and Swedish Orphan Biovitrium, has reported consulting or advising roles for Sixth Element Capital, Adaptaimmune, Amcure, AstraZeneca, Bayer, Blueprint Medicines, Bristol-Myers Squibb, Boeringer Ingelheim, Cristal Therapeutics, Daiichi Sankyo Pharma, Eisai, Eli Lilly, Epizyme, Genzyme, Ipsen, Loxo Oncology, Medspace, Nektar, Novartis, Philogen, Piqur Therapeutics, Plexxikon, is a member of speaker’s bureau of Bayer, Eisai, Eli Lilly, GlaxoSmithKline, Novartis, PharmaMar, Swedish Orphan Biovitrium, has received research grants from Bayer, Blueprint Medicines, CoBioRes, Exelixis, Bristol-Myers Squibb, Novartis, Plexxikon, and has received travel grants from Sixth Element Capital, Adaptaimmune, Amcure, AstraZeneca, Bayer, Blueprint Medicines, Bristol-Myers Squibb, Boehringer Ingelheim, Cristal Therapeutics, Daichii Sankyo Pharma, Eisai, Eli Lilly, Epizyme, Genzyme, GlaxoSmithKline, Ipsen, Loxo Oncology, Medpace, Nektar, Novartis, PharmaMar, Philogen, Piqur Therapeutics, Plexxikon, Swedish Orphan Biovitrium; SSt has received honoraria from Eli Lilly and PharmaMar, research grants from Amgen Dompé, Advenchen, Bayer, Eli Lilly, Daiichi Sankyo Pharma, Epizyme Inc., Novartis, Pfizer and PharmarMar; travel grants from PharmaMar and has reported advisory/consultant roles for Bayer, Eli Lilly, ImmuneDesign, Maxivax and PharmaMar; WVdG has received research grants from Novartis; EW has reported travel/research grants and/or honoraria from Novartis Oncology, Milestone, Menarini, PharmaMar, Roche, Nanobiotix and Bayer; JYB has declared research grants and honoraria from Novartis, GlaxoSmithKline, Pfizer and Bayer; IL has received honoraria from Bristol-Myers Squibb, MDS, Roche, Novartis and Pfizer for scientific presentations or research; NA, RB, JVMGB, AB, EDA, AFed, VF, AFer, GG, TG, RLH, RI, SK, DAK, RP, PP, SP-N, ALP, OM, MM, MHR, AAS, SSl, KSH, MU, JW and FVC have declared no conflict of interest. SF, AH and OZ have not reported any potential conflicts of interest.
Publisher Copyright:
© 2017 CEPII (Centre d'Etudes Prospectives et d'Informations Internationales), a center for research and expertise on the world economy
PY - 2017/12/1
Y1 - 2017/12/1
N2 - Sovereign wealth funds (SWFs) have been increasingly active over the past decade, with governments raising concern regarding their actual motives and the potential for cross-border interest in national strategic sectors. The aim of this paper is to contribute to the existing literature by improving our understanding of the decisions being taken by this new class of investors. The decision-making process informing such investments is complex in the sense that it involves several levels of decision that may potentially interact. In this study, we investigate the determinants of SWFs’ foreign investments, while considering in a single model the sequence of choices involved in their decisions, specifically (i) the decision to invest abroad or not, (ii) the decision to invest in a listed versus unlisted firm, and (iii) the decision to take large versus small stakes. Using a nested logit approach on one of the largest SWFs, the Singaporean fund Temasek, over the period 1990–2010, we provide clear evidence of dependence in the three levels of decision making considered. In addition, we show that the probability of Temasek's cross-border investment increases with the excess of foreign exchange (FX) reserves, that the SWF tends to target unlisted firms when asymmetry of information is low between the target company and its home country, and that its involvement in large stakes depends on a firm's financial characteristics.
AB - Sovereign wealth funds (SWFs) have been increasingly active over the past decade, with governments raising concern regarding their actual motives and the potential for cross-border interest in national strategic sectors. The aim of this paper is to contribute to the existing literature by improving our understanding of the decisions being taken by this new class of investors. The decision-making process informing such investments is complex in the sense that it involves several levels of decision that may potentially interact. In this study, we investigate the determinants of SWFs’ foreign investments, while considering in a single model the sequence of choices involved in their decisions, specifically (i) the decision to invest abroad or not, (ii) the decision to invest in a listed versus unlisted firm, and (iii) the decision to take large versus small stakes. Using a nested logit approach on one of the largest SWFs, the Singaporean fund Temasek, over the period 1990–2010, we provide clear evidence of dependence in the three levels of decision making considered. In addition, we show that the probability of Temasek's cross-border investment increases with the excess of foreign exchange (FX) reserves, that the SWF tends to target unlisted firms when asymmetry of information is low between the target company and its home country, and that its involvement in large stakes depends on a firm's financial characteristics.
KW - Foreign Investment
KW - Nested Logit model
KW - Sovereign Wealth Funds
UR - http://www.scopus.com/inward/record.url?scp=85022100317&partnerID=8YFLogxK
U2 - 10.1016/j.inteco.2017.06.003
DO - 10.1016/j.inteco.2017.06.003
M3 - Article
AN - SCOPUS:85022100317
SN - 2110-7017
VL - 152
SP - 91
EP - 106
JO - International Economics
JF - International Economics
ER -