The Public Investment Fund (PIF) changed its strategy to align with the 2030 Vision of Saudi Arabia. Therefore, this study was conducted to investigate the impact of PIF investment on the performance of the target companies. At the end of the study, the reader is provided with an overview to characterize the impact of PIF on businesses against the global backdrop. Furthermore, a quantitative research design was used to examine the relationship between the PIF investments and the impact on the performance of the target firms listed on Tadawul. This research conducted three multiple regression models to measure the relation between the performance of the investee firms and the PIF investments. The results show that the PIF investments positively affect target firms but do not significantly affect firm performance in the long run. Furthermore, the study found that the transparency of the PIF is very low; it does not disclose its strategy or its future investments.
Alhashel, B. (2015). Sovereign Wealth Funds: a literature review. Journal of Economics and Business, 78, 1-13. doi.org/10.1016/j.jeconbus.2014.10.001
Backer, L. C. (2009). Sovereign wealth funds as regulatory chameleons: The Norwegian sovereign wealth funds and public global governance through private global investment. Georgetown Journal of International Law, 41(2), 425.
Balin, B. J. (2008). Sovereign Wealth Funds: a Critical Analysis, Working Paper Series, The Johns Hopkins University School of Advanced International Studies (SAIS).
Beck, R., & Fidora, M. (2008). The impact of sovereign wealth funds on global financial markets. Intereconomics, 43(6), 349-358. https://doi.org/10.1007/s10272-008-0268-5
Benedictow, A., & Boug, P. (2017). Calculating the real return on a sovereign wealth fund. Canadian Journal of Economics/Revue Canadienne d'Économique, 50(2), 571-594. doi:10.1111/caje.12270
Bertoni, F., & Lugo, S. (2014). The effect of sovereign wealth funds on the credit risk of their portfolio companies. Journal of Corporate Finance, 27, 21-35.
doi:10.1016/j.jcorpfin.2014.04.004
Bloomberg. (2019). Bloomberg - Saudi Aramco’s $2 Trillion Zombie IPO. Retrieved from https://www.bloomberg.com/news/articles/2018-07-07/saudi-aramco-s-2-trillion-zombie-ipo
Bortolotti, B., Fotak, V., & Megginson, W. L. B. (2015). The rise of sovereign wealth funds: definition, organization, and governance. In Public Private Partnerships for Infrastructure and Business Development (pp. 295-318). Palgrave Macmillan, New York.
Caner, M., & Grennes, T. (2010). Sovereign wealth funds: The Norwegian experience. World Economy, 33(4), 597-614.
Chambers, D., Dimson, E., & Ilmanen, A. (2012). The norway model. Journal of Portfolio Management, 38(2), 67-81.
Chesterman, S. (2007). The turn to ethics: Disinvestment from multinational corporations for human rights violations-the case of Norway's sovereign wealth fund. Am. U. Int'l L. Rev., 23, 577.
Chhaochharia, V., &Laeven, L. (2008). Sovereign wealth funds: Their investment strategies and performance.
Dewenter, K. L., Han, X., & Malatesta, P. H. (2010). Firm values and sovereign wealth fund investments. Journal of Financial Economics, 98(2), 256-278. doi:10.1016/j.jfineco.2010.05.006
Diwan, K. S. (2009). Sovereign dilemmas: Saudi Arabia and sovereign wealth
funds. Geopolitics, 14(2), 345-359.
Eriksen, T. (2006). The norwegian petroleum sector and the government pension fund–global. Ministry of Finance, Norwegian Government, Oslo.
Fernandes, N. (2014). The impact of sovereign wealth funds on corporate value and performance. Journal of Applied Corporate Finance, 26(1), 76-84.
doi:10.1111/jacf.12056
Gangi, F., Meles, A., Mustilli, M., Graziano, D., & Varrone, N. (2018). Do investment determinants and effects vary across sovereign wealth fund categories? A firm-level analysis. Emerging Markets Review, doi:10.1016/j.ememar.2018.12.004
Gieve, J. (2009). SOVEREIGN WEALTH FUNDS AND GLOBAL IMBALANCES. Revue d'Économie Financière.
Grimnes, S., & Martinsen, Ø. (2015). Bioimpedance & bioelectricity (3rd ed.). London: Academic Press.
Jen, S. (2007). Sovereign wealth funds. World economics, 8(4), 1-7.
Johnson, S. (2007). The rise of sovereign wealth funds. Finance and development, 44(3), 56.
Kern, S. (2007). Sovereign wealth funds–state investments on the rise. Deutsche Bank Research, 10, 1-20.
Knill, A. M., Lee, B. S., &Mauck, N. (2012). Sovereign wealth fund investment and the return-to-risk performance of target firms. Journal of Financial Intermediation, 21(2), 315-340. doi:10.1016/j.jfi.2011.10.001
Kotter, J. &Lel, U. (2009). Sovereign Wealth Funds: The New Intersection of Money and Politics.
Kotter, J., &Lel, U. (2011). Friends or foes? target selection decisions of sovereign wealth funds and their consequences. Journal of Financial Economics, 101(2), 360-381. doi:10.1016/j.jfineco.2011.03.007
Machado E Silva, Isabela Morbach, & Medeiros Costa, Hirdan Katarina de. (2019). Brazilian social funds: The lessons learned from the Norway fund experience. Energy Policy, 129, 161-167. doi:10.1016/j.enpol.2019.01.062
Milhench, C. (2018). Global sovereign fund assets jump to $7.45 trillion: Preqin. 2018, from https://www.reuters.com/article/us-global-swf-assets/global-sovereign-fund-assets-jump-to-7-45-trillion-preqin-idUSKBN1HJ2DG
Mohsin, S. (2014). Norway Wealth Fund Wins Labor Backing to Buy New Asset Classes. 2019, from https://www.bloomberg.com/news/articles/2014-05-07/norway-wealth-fund-wins-labor-backing-to-buy-new-asset-classes
Mulder, M. C. B., Sy, M. A. N., Lu, Y., & Das, M. U. S. (2009). Setting up a sovereign wealth fund: some policy and operational considerations: International Monetary Fund.
Nbim.no. (2019). The fund. Retrieved from https://www.nbim.no/en/
PIF (2019). PIF - Public Investment Fund. [online] Pif.gov.sa. Available at: https://www.pif.gov.sa/ar/Pages/AboutPIF.aspx [Accessed 10 Feb. 2019].
Quandl. (2019). Quandl. Retrieved from https://www.quandl.com/data/OPEC/ORB-OPEC-Crude-Oil-Price
Raymond, H. (2008). The effect of Sovereign Wealth Funds’ involvement on stock markets. Bank of France Occasional Paper, 7, 1-17.T
Salameh, M. G. (2016). Saudi Arabia's Vision 2030: A Reality or Mirage.
Saudiaramco. (2019). Saudi Aramco signs share purchase agreement to acquire 70% majority stake in SABIC from the Public Investment Fund of Saudi Arabia. Retrieved from https://www.saudiaramco.com/en/news-media/news/2019/aramco-sabic
Shields, L. and Twycross, A. (2003). The difference between quantitative and qualitative research. Paediatric Nursing, 15(9), pp.24-24.
Skancke, M. (2003). Fiscal policy and petroleum fund management in Norway. Fiscal Policy Formulation and Implementation in Oil-Producing Countries, 316, 318-320.
Statista, N. (2017). Infographic: Norway's Sovereign Wealth Fund Hits $1 Trillion. Retrieved from https://www.statista.com/chart/11281/norways-sovereign-wealth-fund-hits-dollar1-trillion/
Statista. (2018). Leading SWFs worldwide by assets 2018 | Statistic. Retrieved from https://www.statista.com/statistics/276617/sovereign-wealth-funds-worldwide-based-on-assets-under-management/
SWC. (2019). Sovereign Wealth Center. Retrieved from
https://www.sovereignwealthcenter.com/fund/17/kuwait-investment-authority-swf.html#.XH59Ai2B3Uo
Sovereign Wealth Fund Institute. (2019). Sovereign wealth funds rankings 2019 from https://www.swfinstitute.org/sovereign-wealth-fund-rankings/
Tadawul.com.sa. (2019). Retrieved from
https://www.tadawul.com.sa/Resources/Reports/MajorStakeHoldersPageArabic_ar.html
The national. (2018). Saudi Arabia’s PIF targets $2 trillion portfolio by 2030. Retrieved from https://www.thenational.ae/business/economy/saudi-arabia-s-pif-targets-2-trillion-portfolio-by-2030-1.783557
Urban, D. (2011). The Role of Sovereign Wealth Funds in Global Management of Excess Foreign Exchange Reserves. Comparative Economic Research, 14(2), 143-158.
Vision2030. (2016). Vision2030. Retrieved from https://vision2030.gov.sa
Weiss, M. A. (2008). Sovereign Wealth Funds: Background and Policy Issues for Congress. Congressional Research Service, Library of Congress.
Yang, L., & Zhang, J. (2012). Political and Economic Analysis on SWFs of Saudi Arabia. Journal of Middle Eastern and Islamic Studies (in Asia), 6(3), 28-57.
In-Text Citation: (Othman & Albuainain, 2022)
To Cite this Article: Othman, J., & Albuainain, S. F. (2022). The Impact of Public Investment Fund on the Financial Performance of Listed Firms on Tadawul: Empirical Evidence from the Saudi Arabia Market. International Journal of Academic Research in Business and Social Sciences, 12(4), 112–130.
Copyright: © 2022 The Author(s)
Published by Knowledge Words Publications (www.kwpublications.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode
