Corporate Benefits from Investing in Poland's Special Economic Zones

Since Poland embarked on the path of economic and political reform, a record volume of foreign direct investment has streamed into the country. A significant portion of foreign direct investment has been concentrated in special economic zones which offer a variety of business incentives to potential investors. The study provides evidence on how corporate valuations respond to investment announcements by companies in the Polish special economic zones where business incentives are offered. The results show that announcements of investment projects in Poland's special economic zones by publicly traded companies elicit a positive and significant stock price response. Furthermore, the positive reaction is much stronger for those projects in which the announced monetary value is relatively high. Multinational companies with substantial investment capital and unique capabilities (ownership advantages) benefit from business incentives by investing in special economic zones (location advantages) through the medium of greenfield investment (internalization advantages).