State Ownership, Sovereign Wealth Funds and Firm Performance

This research aims to study the relation between state owners - one special type of block holders - and firm performance. Using global state ownership data, my research shows that whether the largest state block holder represents central government or local government matters. The u-shaped relation between firm performance and state ownership, and the effect of multiple block holders in addition to the largest state block holder and the dispersion between control rights and cash flow rights on firm performance are also studied. The relation between Sovereign Wealth Funds (SWF) and corporate performance is also studied. This is a unique study on the performance of firms controlled by SWFs and how their performance compares to other state-controlled and non-state-controlled firms. The empirical evidence shows that the SWF-controlled firms outperform other types of firms. The positive relation between SWF ownership and firm performance becomes negative once the SWF shareholding reaches a certain high level. This reversed u-shaped relation between SWF ownership and firm performance is different from that between state ownership and firm performance.