The multinationalization of large spanish firms: the valuation of the Madrid stock exchange.

Abstract

What was the Stock Market response to the international expansion of Spanish firms? In this paper we answer this question analyzing the abnormal returns generated by 191 Foreign Direct Investments (FDI) made by 56 Spanish firms listed in the Madrid Stock Exchange between 1990 and 2003. Our data show, on average, a positive valuation of FDIs, although some of them have generated negative abnormal returns. Thus, the stock market does not react in the same way to every kind of FDI. As could be expected, how, who, where and when the FDI is made really matters.