Kallunki, Juha-Pekka, Jorma Larimo and Seppo Pynnonen (2000). Value creation in foreign direct investments. Management International Review.

Abstract This study examines stock market reactions i.e. wealth creation in foreign manufacturing investments. In addition to empirically examining the wealth effects of investing firms, the study examines the impact of several investing firms and investment related factors on the wealth effects. The data of the study is based on 79 foreign investments made by Finnish firms between 1985 and 1996. The results indicate that, on average, foreign direct investments have significant value creating effects for investing firm shareholders, i.e., value creation of foreign direct investments generally proves to be a fact. However, none of the specific features of the investment, such as type, form or target country of the investment, showed any divergent value creation effects.

Key words: foreign direct investment, value creation, event study