*Special Issue for the Journal of International Business Policy*

*THE EVOLVING ROLE OF Sovereign Wealth Funds:*

*ISSUES and challenges*

*Special Issue Editors:*

§  Narjess Boubakri (Professor of Finance and Bank of Sharjah Chair in
Banking and Finance, School of Business Administration, American University
of Sharjah, American University of Sharjah, UAE)

§  Veljko Fotak (Associate Professor of Finance at the University at
Buffalo and a Fellow at the Sovereign Investment Lab at Bocconi University)

§  Omrane Guedhami (C. Russell Hill Professor and Professor of
International Finance, Moore School of Business, University of South

§  Yukihiro Yasuda (Professor of Graduate School of Business
Administration, Hitotsubashi University, Tokyo, Japan)

*Deadline for submission:* October 15, 2021 (for special issue)

*Tentative publication date:* Fall 2022

*Significance of the Topic and Reasons for the Special Issue of JIBP*

The Sovereign Wealth Fund Institute defines a Sovereign Wealth Fund (SWF)
as “a state-owned investment fund or entity that is commonly established
from balance of payments surpluses, official foreign currency operations,
the proceeds of privatizations, governmental transfer payments, fiscal
surpluses, and/or receipts resulting from resource exports.” SWFs invest
worldwide in a myriad of asset classes (stocks, Treasury bonds, etc.) and
sectors (financial, real estate and infrastructure, power generation,
sports, commodities, airlines, manufacturing, etc.). Because of their rapid
growth and sheer scale (by June 2018, SWFs had accumulated $7.8 trillion of
assets under management, from $3.3 trillion in 2004, according to data from
the Sovereign Wealth Fund Institute), SWFs have attracted substantial
interest from academics, practitioners, politicians, media, and the public
at large. Notably, Google News reports 632,000 news items related to SWFs
in the first nine months of 2020.

While the explicit goals and objectives of individual SWFs differ, most
have a mandate to preserve wealth from limited natural resources for future
generations. At the same time, SWFs aim to diversify revenue streams of
countries tied to natural resources by investing in unrelated industries,
generally outside their domestic borders. In this form, SWFs have been
around for more than 50 years, but first came to the attention of Western
audiences about a decade and a half ago. The global financial crisis (GFC)
brought their aggressive acquisition sprees to light, as well as their role
as liquidity providers to failing financial and non-financial firms. The
renewed attention has revealed their deep impact on foreign markets and the
domestic economies from which they originate. Virtually all countries have
been affected by SWF investments, both directly and indirectly.

However, today, SWFs face a perfect storm, with a confluence of
challenges. First,
collapsing oil prices have dramatically slowed the pace of asset
accumulation that helped them rise to prominence. At the same time, a world
with greater trade restrictions and tighter borders (Evenett, 2019) implies
lower global currency imbalances. This further depletes the main sources of
asset accumulation for currency reserve-based funds. The size of SWF
portfolios has also shrunk due to huge losses, as SWFs were forced to
liquidate parts of their portfolios at fire-sale prices in order to support
domestic economies. To compound these trends that imperil the long-term
survival of funds, recent corruption scandals have embroiled funds from the
Korea Investment Corporation (KIC) to the Malaysian State Fund 1MBD and
even the Norwegian Pension Fund Global, widely seen as the best-governed

What has emerged is the need for a fundamental governance overhaul,
including a more explicit definition of the main objective of each fund,
highlighted by the need to set priorities among wealth preservation,
revenue diversification, economic development, and fiscal stabilization. In
the midst of these challenges, we question whether we should anticipate an
end to the golden age of SWFs, or the beginning of a new trend, one in
which SWFs redefine their main role away from simple wealth preservation to
helping domestic economies diversify from hydrocarbons.

In the midst of the economic carnage from the coronavirus pandemic, slower
global economic growth, and a steep rise in protectionism, SWFs are, more
than ever, expected to dedicate large amounts to domestic investments
2018). This pressure, together with more uncertain sources of revenues to
these funds, is putting them under the spotlight of academicians and
politicians alike (Grira, 2019; Megginson & Fotak, 2020; Megginson & Gao,
2020). The bailout programs that resulted from the GFC also underlined the
phenomenon of “capitalist states,” as governments began keeping pace with
acquisitions worldwide (e.g., Kotter & Lel, 2011; Megginson & Fotak, 2015;
Park, Xu, In, & Ji, 2018). This topic is likely to attract even greater
interest in the near future, given the unprecedented level of government
interventions in support of economies all over the globe during the current

The number of SWFs and their assets (foreign and domestic) under management
has grown continuously in both developed and developing countries, across
all continents. A 2016 report by PWC, entitled “Sovereign investors 2020: A
growing force,” identifies SWFs as inevitably major players in global
markets in the years to come. However, because these funds have become
engulfed in the unprecedented worldwide crisis resulting from the COVID-19
pandemic, we have yet to fully understand them, their motivations
(Calluzzo, Dong, & Godsell, 2017; Carney, 2018), asset allocation, overall
behavior and strategy, firm impact (Aguilera, Capapé, & Santiso, 2016;
Boubaker, Boubakri, Grira, & Guizani, 2018) and economy-level impact
(Karolyi & Liao, 2017; Megginson & Gao, 2020). In a recent review of the
literature on SWFs, Fotak, Gao, & Megginson (2017) note that “extant
research has failed to provide answers to some of the most fundamental, and
most important, questions surrounding SWFs. Foremost is the question
whether SWFs can truly become vehicles financing economic development, to
the benefit of the populations of the sponsoring countries.” This is a
legitimate question given the current situation.

For this Special Issue, we invite high-quality theoretical and empirical
research that develops a better understanding of SWFs, their objectives,
level of activism, and effects, within a globalization framework “central
to the field of international business” (Lundan, 2018). Most importantly,
we are focused on “forward-looking” research that will analyze past trends
and events to sharpen our understanding of the evolving future role of
SWFs. We believe the topic of SWFs remains integral to the understanding of
international business, because of 1) the scale of the funds, 2) their
fundamental role in providing a release valve to global imbalances in trade
and financial flows, and 3) core issues embedded in their existence that
touch upon the impact of cross-border financial flows on domestic firms and
markets, as well as the political economy considerations that are
inevitably linked to the sovereign nature of these funds.

To this end, we are interested in papers that employ rich new datasets, and
exploit exogenous shocks to the economy to investigate the evolution of
SWFs. The following are some select, non-comprehensive, examples of
possible research topics:

1.     The evolution of SWFs over time: Given current COVID-related fiscal
shocks, will SWFs increase their domestic asset allocations? If so, could
this lead to instability in foreign (mostly Western) markets as they divest
abroad? How does an SWF retrenchment affect foreign firms in which they own

2.     How can we distinguish between the political and financial/economic
objectives of SWFs? Specifically, are SWFs based in autocratic countries
more resilient to pressures to retreat domestically? For example, Norway is
increasing domestic dividend distributions, but the Public Investment Fund
of Saudi Arabia (PIF) is going on a shopping spree, completely oblivious to
the domestic fiscal crisis. Is PIF an isolated case, or do non-democratic
SWFs have an advantage when it comes to their ability to buy assets cheaply
during a downturn?

3.     Anecdotal evidence suggests that SWFs outperformed over the
2008-2010 period with financial sector investments. What was their impact

4.     How can SWFs adjust their asset allocation strategies to minimize
the impact of revenue reduction, for example, following the oil price
collapse this year?

5.     Recent trends have seen SWFs enter novel markets. In particular, we
note an increase in corporate lending, infrastructure, and, most notably,
early-stage investing. SWFs are increasingly playing a role in
government-sponsored venture capital incubators. Are these part of an
attempt to diversify revenue streams, or are they representative of
long-term trends that will shape the future of SWFs?

6.     We observe increasing reports of SWF lending directly to firms. How
do SWF loans compare to private sector loans? Do these loans lead to a
previously unexplored channel of influence?

7.     What role do SWFs play in infrastructure financing? Are they in a
position to make up for private sector shortfalls?

Submission Process

Papers for the special issue should be submitted at For information or questions about
the Special Issue, please contact us at [log in to unmask],
using the subject heading: “SI and Conference on SWFs.”

There will be a one-day academic conference on the topic to be co-organized
by the Moore School of Business, University of South Carolina and Graduate
School of Business Administration, Hitotsubashi University in Tokyo, Japan,
on March 11, 2022. Although we are hoping that we will proceed with an
in-person conference, we may have to change our plan depending on the
progress of the COVID-19 pandemic and travel restrictions to Japan. The
conference will provide an opportunity for authors whose works are invited
for resubmission to the JIBP Special Issue on “Sovereign Wealth Funds and
Capitalist States: Issues and Challenges” to develop their papers to meet
JIBP high-quality standards. Renowned scholars working on this topic have
confirmed their attendance at the workshop and will serve as discussants.
The time allocated to each paper is 25 minutes for the presenter, 20
minutes for the discussant, and 10 minutes for the audience.

The conference will include a keynote speech by Professor William
Megginson, who is Professor and Price Chair in Finance at the University of
Oklahoma’s Michael F. Price College of Business.


JIBP general submission deadline: October 15, 2021

Publication of Special Issue: Fall 2022


Aguilera, R. V., Capapé, J., & Santiso, J. 2016. Sovereign wealth funds: A
strategic governance view. *Academy of Management Perspectives*, 30(1):

Boubaker, S., Boubakri, N., Grira, J., & Guizani, A. 2018. Sovereign wealth
funds and equity pricing: Evidence from implied cost of equity of publicly
traded targets. *Journal of Corporate Finance*, 53: 202–224.

Calluzzo, P., Dong, G. N., & Godsell, D. 2017. Sovereign wealth fund
investments and the US political process. *Journal of International
Business Studies*, 48(2): 222–243.
Carney, R.W. 2018. *Authoritarian capitalism: Sovereign wealth funds and
state-owned enterprises in East Asia and beyond*. Cambridge: Cambridge
University Press.

Cuervo-Cazurra, A. 2018. Thanks but no thanks: State-owned multinationals
from emerging markets and host country policies. *Journal of International
Business Policy*, 1: 128–156.

Evenett, S. J. 2019. Protectionism, state discrimination, and international
business since the onset of the Global Financial Crisis. *Journal of
International Business Policy*, 2(1): 9–36.

Fotak, V., Gao, X., & Megginson, W. L. 2017. A financial force to be
reckoned with? An overview of sovereign wealth funds. *The Oxford Handbook
of Sovereign Wealth Funds*, 16.

Grira, J. 2019. Back to government ownership: The Sovereign Wealth Funds
phenomenon. *Finance Research Letters*, forthcoming.
Lundan, S. M. 2018. From the editor: Engaging international business
scholars with public policy issues. *Journal of International Business
Policy*, 1: 1–11. Karolyi, A., & Liao, R. 2017. State capitalism's global
reach: Evidence from foreign acquisitions by state-owned companies. *Journal
of Corporate Finance*, 42: 367–391. 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.

Megginson, W. L., & Fotak, V. 2015. Rise of the fiduciary state: A survey
of Sovereign Wealth Fund research. *Journal of Economic **Surveys*, 29(4):

Megginson, W. L., & Fotak, V. 2020. Government equity investments in
coronavirus rescues: Why, how, when? SSRN Electronic
Journal, 10.2139/ssrn.3561282.

Megginson, W.L., & Gao, X. 2020. The state of research on sovereign wealth
funds. *Global Finance Journal*, 44, 100466.

Park, R. J., Xu, S., In, F., & Ji, P. I. 2019. The long-term impact of
sovereign wealth fund investments, *Journal of Financial Markets*, 45:

*About the Guest Editors*

*Narjess Boubakri (American University of Sharjah, UAE)*

Narjess Boubakri is the first Bank of Sharjah Endowed Chair in Banking and
finance professor at the School of Business Administration of the American
University of Sharjah. She is currently the Dean of the School of Business

She received her Ph.D. in Finance from Laval University (2000). Her main
research interests are in privatization, corporate governance, empirical
finance, international finance, economic reforms, and political economy.
Professor Boubakri has also published in the area of Corporate Social
responsibility, Islamic Finance, and Sovereign Wealth Funds.

Professor Boubakri has authored numerous articles and book chapters. Her
research has been published in some of the most prestigious peer-reviewed
journals, including the *Journal of Finance*, *Journal of Financial
Economics*, *Journal of International Business Studies,* and *Journal of
Corporate Finance*. She is the Finance Editor of the *Quarterly Review of
Economics and Finance*, Associate Editor of the* Journal of Corporate
Finance, *and Chief Editor of* Finance Research Letters*. She sits as
subject editor on the editorial boards of *Emerging Markets Review*, *Journal
of International Financial Markets Institutions and Money, *and* Journal of
International Business and Policy*.

*Veljko Fotak (University at Buffalo)*

Veljko Fotak is an Associate Professor of Finance at the University at
Buffalo, and a Fellow at the Sovereign Investment Lab, Paolo Baffi Centre
on Central Banking and Financial Regulation, Bocconi University.

Veljko’s research is focused on international corporate finance, with a
particular emphasis on state capitalism, sovereign wealth funds, and, in
broader terms, the impact of government ownership on firm behavior,
performance, and valuation. Veljko’s research has been published in leading
academic journals, including the *Journal of Financial Economics* and
the *Review
of Financial Studies*, and has been cited in *The Wall Street
Journal*, the *Financial
Times*, the *New York Post*, on Bloomberg, and in other media outlets. He
teaches courses on corporate finance, global economics, and international
financial management for both undergraduate and graduate students. He also
serves as an Associate Editor at the *Journal of Corporate Finance*.

Veljko earned a B.S. degree in Business Administration, an MBA with a
concentration in Finance, and an M.S. in Applied Statistics from the
Rochester Institute of Technology in Rochester, NY, and a Ph.D. in Finance
from the University of Oklahoma.

*Omrane Guedhami (University of South Carolina, USA)*

Dr. Omrane Guedhami is a Moore Research Fellow and a Professor of
International Finance at the Moore School of Business at the University of
South Carolina. Dr. Guedhami earned his M.Sc. in finance from HEC Montreal
in 1998, and received his Ph.D. in finance from Laval University in 2003.

Dr. Guedhami’s research interests are international, covering corporate
governance, privatization, national culture, and corporate social
responsibility. Specifically, his research examines the determinants of
post-privatization performance changes, the impact of privatization on
corporate governance and ownership structure, the determinants of ownership
structure of newly privatized and public firms, and the role of large
blockholders and tax enforcement in corporate governance. His research on
corporate social responsibility (CSR) focuses on the determinants and
economic consequences of firms’ CSR initiatives. His research has been
published in leading academic journals, including the *Journal of Financial
Economics*, *Journal of Financial and Quantitative Analysis, Accounting
Review, Journal of Accounting Research*, the *Journal of Accounting and
Economics*, *Management Science*, *Contemporary Accounting Research*, *Review
of Finance*, *Journal of International Business Studies*, *Accounting,
Organization, and Society*, and *Journal of Business Ethics*, among others.

He has received numerous research distinctions and prestigious awards,
including the 2003 *Best Dissertation in International Finance Case
Award* sponsored
by Indiana University Center for International Business Education and
Research and Financial Management Association International, the *Best
Paper Award in International Finance* at the 2007 Eastern Finance
Association Meeting, the *2011 Moskowitz Prize for Socially Responsible
Investing* (Center for Responsible Business, Haas School of Business,
University of California, Berkeley), the *Best Paper Award* at the 2011
China Goes Global Conference (Harvard Kennedy School), the *Best Paper
Award in Financial Institutions* at the 2012 Southwestern Finance
Association Conference, the Outstanding Paper Award for “Collectivism and
Corruption in Bank Lending,” the *Outstanding Paper Award* at the 2012 and
2013 International Conference on Asia-Pacific Financial Markets, and the
2015 Emerald Citations of Excellence Award. In April 2011, he received
the *Rising
Star Award* from the Office of Research at the University of South
Carolina. His research is funded by Canada’s Social Sciences and Humanities
Research Council.

Dr. Guedhami taught at Laval University and Memorial University of
Newfoundland before joining the Moore School of Business in 2007. He
teaches financial management, investments, international corporate
governance, and international finance at the undergraduate, graduate, and
doctoral levels. He is the coordinating director of the Ph.D. program in
International Finance.

Dr. Guedhami is a member of the editorial boards of major journals,
such as *Contemporary
Accounting Research* and the *Journal of International Business Studies*,
and serves as a Section Editor at the *Journal of Business Ethics*, *Corporate
Governance: An International Review*, *Journal of Applied Accounting
Research*, *Journal of International Accounting Research*, *Emerging
Markets Review*, and Associate Editor of the *Journal of Corporate Finance
and Journal of Financial Stability. *

*Yukihiro Yasuda (Hitotsubashi University, Japan)*

Yukihiro Yasuda is a Professor at the Graduate School of Business
Administration at Hitotsubashi University in Japan.

The focus of his research is bank lending, bank regulation, corporate
governance, and firm disclosure. He has published in finance and related
journals, such as *Journal of Financial Intermediation, Small Business
Economics, Journal of Banking and Finance, Journal of Financial Stability*,
and *Journal of the Japanese and International Economies*.

Dr. Yasuda's teaching experience includes undergraduate and MBA courses and
Ph.D. seminars in the area of corporate finance.

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