Program and Development Research

Program and Development Research

Examining Factors Influencing the Governance Quality of Sovereign Wealth Funds Using Zero-One Inflated Beta Regression, with Emphasis on Corporate-Structured Sovereign Wealth Funds

Document Type : Original Article

Authors
Khadijeh Kaboli 1
Mohammad Taqi Gilak Hakimabadi 2
Zahra Elmi 3
1 Faculty of Economic and Administrative Sciences, University of Mazandaran; Iran
2 Professor, Faculty of Economics and Administrative Sciences, University of Mazandaran, Iran(Corresponding Author)
3 Professor, Faculty of Economics and Administrative Sciences, University of Mazandaran, Iran
10.22034/pbr.2025.515411.1517
Abstract
This study investigates the influence of key national factors—namely, the quality of governance, political regime type, and level of development—on the governance performance of sovereign wealth funds (SWFs), with a particular focus on those operating under a corporate structure. Utilizing 2022 data from 49 countries, including Iran, the analysis employs a Fractional Response Model to explore the relationship between these factors and SWF governance quality. The findings reveal that a 1% improvement in the Good Governance Index increases the likelihood of enhanced fund governance by approximately 0.10%. Similarly, a 1% rise in the Ease of Doing Business Index, the Corruption Perception Index, and the Rule of Law Index leads to increases in governance quality probability by 0.85%, 0.38%, and 0.73%, respectively. Notably, the type of fund—whether commodity-based or noncommodity-based—does not significantly influence governance quality. However, sovereign wealth funds in democratic countries tend to exhibit markedly better governance standards. Given Iran’s low governance ranking for its National Development Fund and the poor performance in critical influencing factors, such as weak national governance and an unfavorable business environment, the study underscores the urgent need for comprehensive reforms. Key priorities include improving the ease of doing business, strengthening the rule of law, and ensuring legal and institutional stability to elevate the governance quality of sovereign wealth management in the country.
Keywords
Sovereign Wealth Fund
Governance Scorecard (GRS)
Good Governance
Fractional Response Models In the range of zero and one
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