The impact of investments made by the Saudi Public Investment Fund on the financial performance of companies that have received funding

Abstract

The research purpose is to investigate how the Saudi public investment fund (PIF) investments affected financial performance of target companies. This performance was also compared with the investments made by the world largest sovereign wealth fund (SWF) from Norway. The study uses a sample of 142 companies for the period from 2010 to 2023. The method of analysis is panel regressions with t-tests. The dependent variables are represented by return on assets (ROA), return on capital employed (ROCE), return on equity (ROE) and net profit margin as accounting performance measures, and annual stock return as a market measure. The results reveal that both the SWF and PIF produced statistically significant negative effects on the financial performance of their target companies. This has implications for investors and corporate managers. The results are limited by the inclusion of only two funds and future studies are recommended to expand the sample to all SWFs available in the world.