In this thesis, the relation between Tobin’s Q and the level of foreign equity ownership for a sample of firms listed in Korea Stock Exchange is examined. In Korea, linear relation is found between Q and the fraction of common stocks owned by foreigners. Q rises as fraction of foreign ownership increases. The analysis using Return on Asset (ROA) and the fraction of foreign ownership shows a similar pattern of linear relation. It appears that, in Korea, foreign investors are good monitors.
