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52 Wake Forest L. Rev. 857 (2017)
International Relations and Sovereign Wealth Funds' Political Value: Evidence from a Quasi-Natural Experiment

handle is hein.journals/wflr52 and id is 893 raw text is: INTERNATIONAL RELATIONS AND SOVEREIGN WEALTH FUNDS' POLITICAL VALUE: EVIDENCE FROM A QUASI-NATURAL EXPERIMENT Gabriele Lattanzio & William L. Megginson* INTRODUCTION Since 1977, governments around the world have raised approximately $4 trillion by successfully selling state-owned enterprises (SOEs) and assets to domestic and international private investors.' This impressive number describes perfectly the rise of privatization programs as a core state policy, the strong, positive economic and financial consequences of which have been extensively documented in the literature.2 Despite the fact that this compelling evidence seems to suggest that states should be reducing their ownership of corporate equity, the question of whether a government might ever act as an objective, profit-oriented global investor managing its nation's wealth as an investment fiduciary remains at least partially unanswered. In fact, recent research on the impact of state ownership on corporate valuation has provided mixed evidence3 supporting the hypothesis that ownership transfer from state-owned entities to private investors is not alone sufficient to generate sustainable efficiency gains for the privatized firms.4 Extant literature's inconclusiveness is further exacerbated by the * Gabriele Lattanzio is a PhD student in Finance at the University of Oklahoma. William L. Megginson is the Michael F. Price Chair in Finance at the University of Oklahoma and the Saudi Aramco Chair Professor in Finance at King Fahd University of Petroleum and Minerals. 1. William L. Megginson, Privatization Trends and Major Deals in 2014 and Two-Thirds 2015, PB REPORT, 2014/2015, at 5, 10-11, http://www.feem.it /mipublications-pages/2017130949104PBAnnualReport_2014-2015.pdf; see also William L. Megginson, Privatization Trends and Major Deals in 2015 and 2016, PB REPORT, 2015/2016, at 5, 10-11, https://assets.kpmg.com/content/dam /kpmg/it/pdf/2017/01/ThePBReport2015-2016.pdf. 2. See generally William L. Megginson, Privatization, State Capitalism, and State Ownership of Business in the 21st Century, FOUND. & TRENDs FIN. (forthcoming); William L. Megginson & Jeffry M. Netter, From State to Market: A Survey of Empirical Studies on Privatization, 39 J. EcON. LITERATURE 321 (2001); Andrei Shleifer, State Versus Private Ownership, 12 J. EcON. PERSP. 133 (1998). 3. Megginson, supra note 2, at 49. 4. Stacey R. Kole & J. Harold Mulherin, The Government as a Shareholder: A Case from the United States, 40 J.L. & EcoN. 1, 17 (1997). 857

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