Abstract
The impact of sovereign wealth funds (SWFs) on target firms' performance is unclear. Previous empirical studies find conflicting evidence, with some documenting a positive impact and others finding a negative impact on target firms' performance. In contrast to previous researchers, we include in the sample both listed and unlisted targets and reconsider the classification of political influence on SWF managerial decisions, observing the identity of the CEO rather than using the Truman score. We identify a 'political CEO' as such if s/he is a political officer or a former political officer or if s/he belongs to the same family as a political officer. Using a sample of 226 deals, we find evidence of an impact of SWF investments on target firms' performance. The presence of a political CEO has a positive impact on target firms' profitability, showing that closer ties to political power play an important role.
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