This paper analyses the stock market reaction to foreign direct investments (FDI), particularly to international joint ventures and international total and partial acquisitions. The influence of the firm’s accrued experience in the host country on the stock market reaction to different entry modes is analysed, Transaction Cost being the theoretical framework used to develop our analysis. In addition, in order to analyze the particular features of partial acquisitions, the “hostage theory” of joint ventures has been used. Our results show that total acquisitions are the entry mode best valued once the investing firm has accrued experience in the host market. They also show that the presence of a partner in the acquisition process increases problems and costs related to the FDI process.

Key words: Foreign direct investment, joint venture, acquisitions, stock market reaction.
JEL classification: F21, F21, D74, G34.