, 40 3 4 (2006 12 ) * 1) *** *** (KCGS) 2003, 2004 (CGI),. (+),.,,,.,. (endogeneity) (reverse causality),.,,,. I. 1998. 2005 12 ( ) *. ** ***
2, 40 3 4 37.2%, 20 60%. 80%..,..,.,,, (SCB),,,.,..,, /,.. II. III. IV V 2SLS. VI
3. II... Bekaert, Harvey (2000),,,., 5bp 75bp.. Black, Jang, Kim(2003) 2001,. Tobin Q,,,..,,, 50%,. Joh(2003) 1993 1997 ( ) 5,829.,. (Lemmon Lins, 2003),
4, 40 3 4.,. Joh,. Lemmon Lins(2003) 8 800,., - 10~20%.. Durnev Kim(2003) CLSA 1). CLSA S&P,,,,,,. Tobin Q, Tobin Q. Gompers, Ishii, Metrick(2003) M&A, M&A 24 (Governance Index). (proxy)., 8.5%.. 1) (Credit Lyonnais Securities Asia: CLSA). CLSA 2000,.
5 (2005),.. (+).,.. 2) ( ).,... 2), (2006).
6, 40 3 4 III. (Corporate Governance Service) 2003, 2004.,,,, 5. 2003 425, 2004 407, 253 2003 2004. 5 2003 2004 62. 1. 5, 2. Black, Jang, Kim(2003)., 1 62 0 1, (sub-index). 20. 20 0 100. 5.
7 A( ): (A1), (A2), (A3), (A4), (A5), (A6), (A6), (A8), 1 (A9), 10% (A10), 1% (A11), 0.1% (A12), 5% (A13), 5% (A14), 1% (A15), 10% (A16), 10% (A17), 5% (A18), 3% (A19), 5% (A20), 2% (A21), 10% (A22), 10% (A23) [ 23 ] B( ) : (B1), (B2), (B3), 50% (B4), 50% (B5), (B6), (B7), 10% (B8) [ 8 ] C( ) : 4 (C1), (C2), (C3), (C4), (C5), 70& (C6), 4 (C7), (C8), (C9), / (C10), (C11), (C12), (C13) [ 13 ] D( / ): IR (D1), (D2), (D3), (D4), (D5), (D6), (D7), (D8),,, (D9), (D10) [ 10 ] E( ): (E1), 2/3 (E2), (E3), (E4), (E5), 4 (E6), (E7), (E8) [ 8 ]
8, 40 3 4 = 1 ( ), 0 ( ) A = [(A1+A2+ +A23)/23] X 20 B, C, D, E CGI = A + B + C + D + E 2003 2004 2 1. 2003 85.8, 11.4 74.4. 100 35.34,. A A, B, C, D, E,,,, 0~20. (CGI) 0~100. A 2003, B 2004. (%) ( A) 2003 A 425 9.7 16.5 4.4 9.6 2.2 B 425 3.6 20.0 0 2.2 3.2 C 425 6.7 20.0 0 6.7 3.6 D 425 8.0 20.0 0 8.0 4.5 E 425 7.3 20.0 0 5.0 5.0 CGI 425 35.3 20.0 0 32.5 13.1 ( B) 2004 A 407 9.7 15.7 4.3 8.0 1.9 B 407 3.0 20.0 0 2.2 3.8 C 407 7.3 20.0 0 6.7 3.9 D 407 9.0 20.0 2.0 8.0 3.9 E 407 7.5 20.0 0 7.5 4.7 CGI 407 36.5 20.0 14.0 30.2 14.4
9 ๋น๋์ 45 40 35 30 25 20 15 10 5 0 10 20 30 40 50 60 70 80 90 CGI [2003 ] 60 50 40 ๋น๋์ 30 20 10 0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 CGI [2004 ] 2003 2004 (CGI). 2003 425, 35.34, 32.5, 11.4, 85.8, 13.1%, 2004 407, 36.5, 30.2, 14.0, 93, 14.4%.,. B 3.63
10, 40 3 4. 2004 2003. IV.,., 2.. 2. 2003 2004 0.387 0.430, t- 9.43 11.38. 2003 86.1%, 2004 85.8%, 33~37. 30,,.,.,
11 2003 ๋ ์ธ๊ตญ์ธ์ง๋ถ์จ๊ณผ CGI ๊ฐ์์๊ด๊ด๊ณ๋ถ์ 100 90 80 70 60 C GI 50 40 30 20 10 0 0 20 40 60 80 100 ์ธ๊ตญ์ธ์ง๋ถ์จ 2004 ๋ ์ธ๊ตญ์ธ์ง๋ถ์จ๊ณผ CGI ์๊ด๊ด๊ณ๋ถ์ CGI 100 90 80 70 60 50 40 30 20 10 0 0 20 40 60 80 100 ์ธ๊ตญ์ธ์ง๋ถ์จ.. 5. 5 #1( quintile 1 )
12, 40 3 4 5 (quintile), quintile 1, quintile 5. 1 5 quintile,. quintile 1 quintile 5, t. A 2003, B 2004, 425, 407. 34.33 (16.38) A 10.80 (2.30) B 5.78 (5.19) C 8.90 (4.12) D 10.89 (4.57) E 10.18 (6.02) CGI 46.52 (17.36) 38.91 (14.78) A 10.12 (1.83) B 6.64 (5.40) C 10.16 (4.48) D 12.37 (4.50) E 10.95 (5.77) CGI 20.23 (18.30) quintile 1 quintile 2 quintile 3 quintile 4 quintile 5 quintile 1-quintile 5 6.19 (3.26) 9.50 (2.00) 3.53 (2.96) 7.18 (3.70) 8.19 (3.91) 7.88 (5.45) 36.30 (12.42) 10.41 (4.69) 9.92 (1.95) 2.71 (3.10) 7.46 (3.62) 9.29 (3.90) 7.80 (4.67) 37.18 (11.92) ( A) 2003 0.77 (0.45) 9.30 (2.20) 3.06 (2.03) 5.92 (2.72) 7.08 (3.24) 6.82 (4.07) 32.18 (7.91) 0.09 (0.06) 9.20 (1.90) 2.90 (1.94) 5.84 (2.87) 7.27 (3.16) 5.76 (3.66) 30.98 (8.72) ( B) 2004 1.36 (1.00) 9.32 (1.79) 2.09 (2.97) 6.56 (3.34) 8.30 (3.18) 6.70 (4.20) 32.96 (11.13) 0.14 (0.10) 9.36 (1.97) 1.84 (2.10) 6.67 (2.92) 7.98 (2.44) 6.08 (3.35) 31.92 (7.27) : *, **, *** 10%, 5%, 1%. 0.00 (0.00) 9.47 (2.10) 2.88 (1.78) 5.80 (3.49) 6.73 (3.25) 5.82 (3.81) 30.71 (9.33) 0.00 (0.00) 9.79 (2.07) 1.65 (2.16) 5.80 (3.22) 6.91 (2.61) 6.02 (3.18) 30.17 (9.03) 34.33*** (19.32) 1.33*** (3.85) 2.90*** (4.88) 3.10*** (5.29) 4.17*** (6.85) 4.35*** (5.63) 15.81*** (7.40) 38.90*** (23.83) 0.33 (1.07) 4.99*** (7.76) 4.36*** (7.14) 5.45*** (9.48) 4.93*** (6.76) 20.06*** (8.89)
13, 5 #5( quintile 5 )., 3, quintile 5 quintile 1, CGI. 2004 A quintile 1 quintile 5. 3),.,,. CGI. 4 CGI. 2003 73, 2004 78. CGI CGI 2003 13, 2004 17..., 2,. (factor), (spurious correlation) 3) A 2,.
14, 40 3 4 > < (t-value) ( A) 2003 A 73 8.5 352 7.5 B 73 5.8 352 3.2 C 73 8.7 352 6.3 D 73 10.9 352 7.4 E 73 10.2 352 6.7 CGI 73 44.1 352 31.1 ( B) 2004 A 78 7.8 329 7.9 B 78 6.8 329 2.1 C 78 10.3 329 6.6 D 78 12.8 329 8.1 E 78 10.7 329 6.8 CGI 78 48.4 329 31.4 * : 10% ** : 5% *** : 1% 1.0** (2.33) 2.6*** (4.19) 2.4*** (4.63) 3.4*** (5.58) 3.6*** (4.66) 13.0*** (5.58) -0.1 (-0.33) 4.7*** (7.31) 3.6*** (6.51) 4.8*** (8.92) 4.0*** (5.48) 17.0*** (7.59).,,.,. 5 6. 2
15 2 2 3. 5 (quintile). 1 5 quintile,. quintile 1-quintile 5 quintile quintile, t-value. [ 2 ] quintile 1 quintile 2 quintile 3 quintile 4 quintile 5 quintile 1-quintile 5 ( A) 2003 26.78 (18.11) A 10.27 (2.15) B 2.98 (2.07) C 6.71 (3.07) D 8.63 (3.20) E 6.88 (4.21) CGI 35.47 (8.14) 28.58 (13.56) A 10.20 (1.86) B 2.38 (2.03) C 6.81 (2.82) D 9.46 (3.73) E 6.61 (3.75) CGI 35.45 (8.36) 3.57 (2.03) 9.41 (1.96) 2.92 (2.18) 6.43 (3.24) 6.89 (3.26) 6.64 (4.61) 32.29 (9.14) 5.40 (2.98) 9.45 (1.82) 1.91 (2.20) 6.50 (2.82) 8.08 (3.14) 6.69 (3.58) 32.64 (8.38) 0.46 (0.29) 9.27 (2.28) 2.81 (1.60) 6.10 (2.70) 7.18 (3.32) 6.81 (3.84) 32.16 (7.54) 0.06 (0.04) 9.37 (1.95) 2.76 (1.41) 5.58 (2.73) 7.25 (3.12) 5.30 (3.34) 30.25 (7.60) ( B) 2004 0.58 (0.32) 9.49 (1.88) 1.49 (2.20) 6.24 (2.94) 8.03 (2.54) 5.86 (3.27) 31.11 (7.58) 0.08 (0.05) 9.50 (1.88) 1.84 (1.85) 6.60 (2.62) 8.03 (2.47) 6.25 (3.53) 32.22 (7.06) 0.00 (0.00) 9.25 (2.03) 2.73 (1.39) 5.42 (2.99) 6.35 (2.84) 5.67 (3.61) 29.41 (6.94) 0.00 (0.00) 9.79 (2.10) 1.62 (2.20) 5.69 (3.11) 6.60 (2.51) 5.86 (3.04) 29.56 (8.67) 26.78*** (12.89) 1.02*** (3.00) 0.26 (0.89) 1.29*** (2.61) 2.29*** (4.64) 1.21* (1.89) 6.06*** (4.93) 28.58*** (15.69) 0.41 (1.22) 0.76** (2.12) 1.12** (2.22) 2.86*** (5.30) 0.75 (1.30) 5.90*** (4.10)
16, 40 3 4 [ 2 ] quintile 1 quintile 2 quintile 3 quintile 4 quintile 5 quintile 1-quintile 5 52.06 (9.13) A 11.30 (2.64) B 13.74 (4.53) C 13.48 (3.69) D 15.82 (4.05) E 16.59 (2.80) CGI 70.94 (11.34) 61.98 (12.21) A 10.78 (1.93) B 13.33 (4.80) C 15.17 (3.19) D 16.00 (3.53) E 16.00 (2.42) CGI 71.28 (12.72) 33.18 (4.74) 11.21 (2.83) 10.37 (6.85) 10.93 (3.64) 14.22 (3.67) 17.22 (3.84) 63.85 (11.34) 41.35 (2.80) 10.36 (1.46) 11.92 (5.47) 14.55 (3.70) 17.27 (2.73) 16.59 (3.25) 70.68 (12.67) ( A) 2003 23.18 (2.28) 11.30 (2.34) 7.16 (4.12) 12.59 (3.13) 15.56 (2.79) 12.78 (5.22) 53.39 (13.47) 8.52 (4.47) 10.09 (1.49) 8.89 (2.77) 12.00 (3.41) 13.60 (3.63) 15.75 (4.72) 60.33 (10.33) ( B) 2004 30.96 (2.91) 9.88 (1.84) 8.89 (3.72) 11.36 (3.15) 13.64 (2.50) 14.09 (4.07) 57.86 (10.85) 18.99 (5.83) 9.71 (1.96) 8.15 (3.33) 13.33 (3.41) 14.50 (3.73) 15.42 (3.96) 61.11 (11.79) : *, **, *** 10%, 5%, 1%. 0.76 (0.86) 9.67 (2.65) 8.89 (3.94) 11.67 (4.45) 11.25 (3.99) 15.31 (3.39) 56.79 (12.04) 3.82 (3.10) 8.30 (2.38) 9.09 (2.89) 13.18 (3.69) 13.64 (2.50) 15.68 (3.89) 59.89 (11.26) 51.30*** (18.52) 1.63 (1.33) 4.85** (2.45) 1.82 (0.94) 4.57** (2.45) 1.28 (0.87) 14.14** (2.59) 58.16*** (14.64) 2.48** (2.64) 4.24** (2.42) 1.98 (1.31) 2.36* (1.76) 0.32 (0.23) 11.39** (2.16) 2003 47, 2004 56., 3 2 quintile 5 quintile 1 CGI. 2
17 2 2 3., t-value. [ 2 ] > < ( A) 2003 A 378 9.51 48 10.54 330 9.36 B 378 2.84 48 2.96 330 2.82 C 378 6.05 48 6.70 330 5.95 D 378 7.26 48 8.46 330 7.09 E 378 6.26 48 6.98 330 6.16 CGI 378 31.93 48 35.65 330 31.39 ( B) 2004 A 351 9.69 42 10.06 309 9.64 B 351 1.85 42 2.86 309 1.71 C 351 6.37 42 7.22 309 6.25 D 351 8.04 42 10.52 309 7.70 E 351 6.25 42 6.37 309 6.24 CGI 351 32.20 42 37.03 309 31.54 1.18*** (3.82) 0.14 (0.49) 0.75* (1.74) 1.37*** (2.89) 0.82 (1.19) 4.25*** (3.48) 0.4 (1.37) 1.1*** (3.25) 1.0** (1.99) 2.8*** (4.56) 0.1 (0.19) 5.5*** (3.82) quintile 5 quintile 1 6 CGI, 2 1/2. quintile 1 quintile 5 CGI t-value, 2
18, 40 3 4 [ 2 ] > < ( A) 2003 A 47 9.53 26 11.24 21 10.14 B 47 9.98 26 11.11 21 8.57 C 47 12.20 26 12.50 21 11.83 D 47 14.21 26 15.15 21 13.05 E 47 15.59 26 16.44 21 14.52 CGI 47 61.50 26 66.44 21 58.11 ( B) 2004 A 56 9.80 36 10.31 20 8.87 B 56 10.16 36 11.36 20 8.00 C 56 13.42 36 13.80 20 12.75 D 56 14.86 36 15.56 20 13.60 E 56 15.45 36 15.83 20 14.75 CGI 56 63.68 36 66.86 20 57.97 : *, **, *** 10%, 5%, 1%. 1.09 (1.60) 2.54* (1.82) 0.67 (0.63) 2.11* (1.92) 1.92 (1.54) 8.33** (2.35) 1.44** (2.56) 3.36*** (3.16) 1.05 (1.04) 1.96** (2.33) 1.08 (0.99) 8.89*** (2.70) CGI 2 CGI 30, 2 quintile CGI.,. 2 CGI
19. 6. 2,.,. 2,, 2,,.. CGI,., 2. 7 (CGI),,. (1)~(6), 2003 381, 2004 373. (7), 98 5 2003 363, 2004
20, 40 3 4 (CGI) OLS, t. (7),. (1) (2) (3) (4) (5) (6) (7) 0.350 *** (9.44) 0.285 *** (8.02) ( A) 2003 0.263 *** (7.70) 0.141 *** (4.55) 0.147 *** (4.70) 0.144 *** (4.61) 0.132 *** (4.03) ( ) 2-0.001-0.001-0.001-0.000-0.000-0.000-0.000 (-1.23) (-1.51) (-1.18) (-0.34) (-0.39) (-0.49) (-0.85) 30 9.740 *** 10.480 *** 5.726 *** 5.605 *** 5.660 *** 4.856 *** (7.59) (8.49) (5.06) (4.95) (5.01) (4.10) 25.181 *** 16.248 *** 9.567 9.630 8.104 (5.87) (4.34) (1.56) (1.58) (1.22) 2 20.276 *** 19.727 *** 19.788 *** 19.836 *** (11.70) (11.11) (11.18) (10.76) 0.004 0.004 0.005 (1.38) (1.37) (1.42) 0.002 0.002 (1.05) (1.50) 0.492 (0.62) 381 381 381 381 381 381 363 R 2 0.37 0.45 0.50 0.63 0.63 0.64 0.61 0.377 *** (10.88) ( ) 2-0.001 (-1.60) 30 2 0.330 *** (9.49) -0.001 (-1.59) 6.933 *** (5.07) ( B) 2004 0.296 *** (8.65) -0.001 ** (-2.13) 7.999 *** (5.98) 22.553 *** (5.22) 0.150 *** (5.00) -0.001 (-1.43) 2.237 * (1.91) 12.468 *** (3.46) 22.229 *** (13.40) 0.150 *** (5.01) -0.001 (-1.50) 2.235 * (1.90) 14.066 *** (2.97) 22.382 *** (13.27) -0.001 (-0.52) 0.135 *** (4.30) -0.001 (-1.60) 2.151 * (1.83) 13.802 *** (2.92) 22.368 *** (13.29) -0.001 (-0.32) 13.453 (1.55) 0.131 *** (3.85) -0.001 (-1.75) 2.229 * (1.86) 14.224 * (1.89) 21.674 *** (11.90) -0.001 (-0.35) 11.604 (1.36) 0.663 (0.74) 373 373 373 373 373 373 348 R 2 0.44 0.47 0.51 0.67 0.67 0.67 0.65 : *, **, *** 10%, 5%, 1%.
21 348., 30,, 2,,, 5,,. 7 (7),., (4)~(7)., (0%) ( 86%), 11. quintile 5( 0%) quintile 1( 34.33% ( 03), 38.91%( 04)) 4.5~5., 30, 2., 2. Durnev (2003) KDI,,, Black (2003).,,.
22, 40 3 4 OLS, t. 7 (7). A B C D E 0.031 *** (3.50) ( ) 2-0.000** (-2.01) 30 0.889 *** (-2.82) 2.833 (1.60) 2 0.525 (1.07) -0.001 (-0.77) 0.000 (0.26) 0.256 (1.22) ( A) 2003 0.028 *** (3.24) 0.000 (1.00) -0.177 (-0.57) 1.834 (1.06) 5.046 *** (10.52) 0.002 ** (2.21) 0.000 (0.56) -0.081 (-0.39) 0.016 (1.32) -0.000 (-0.39) 2.007 *** (4.64) 2.161 (0.89) 3.586 *** (5.34) 0.001 (0.86) 0.001 *** (2.70) 0.000 (0.00) 0.038 *** (2.93) 0.000 (-0.19) 1.564 *** (3.32) -0.698 (-0.26) 5.294 *** (7.23) 0.001 (1.03) 0.000 (0.14) 0.645 (2.05) 0.020 (1.27) -0.000 (-0.74) 2.351 *** (4.12) 1.974 (0.62) 5.385 *** (6.07) 0.001 (0.68) 0.001 (1.22) -0.329 (-0.86) 363 363 363 363 363 R 2 0.09 0.53 0.36 0.38 0.38 0.022 *** (2.94) ( ) 2-0.000*** (-3.31) -1.015 *** 30 (-3.81) 2-2.590 (-1.55) -0.243 (-0.60) 0.001 (1.29) 1.965 (1.04) 0.190 (0.95) ( B) 2004 0.041 *** (4.27) 0.000 (0.14) 0.039 (0.12) 3.741 * (1.78) 6.024 *** (11.86) 0.001 (0.53) 1.037 (0.44) 0.311 (1.24) 0.021 *** (1.65) -0.000 (-1.34) 1.086 ** (2.58) 4.344 (1.64) 4.555 *** (7.13) -0.000 (-0.32) 2.457 (0.8197) -0.123 (-0.39) 0.043 *** (3.39) -0.000 (-0.64) 1.022 ** (2.29) 3.779 (1.35) 4.583 *** (6.78) -0.002 (-1.32) -0.542 (-0.17) 0.575 * (1.72) 0.007 (0.47) -0.000 (-0.82) 1.097 ** (2.15) 4.951 (1.55) 6.754 *** (8.74) -0.001 (-0.42) 6.687 * (1.84) -0.289 (-0.76) 348 348 348 348 348 R 2 0.12 0.62 0.42 0.40 0.45 : *, **, *** 10%, 5%, 1%.
23. 9 (7), 8. 2003 A, B, D, 2004 E.,,. A,. B D,.,,., A, A. A. 2. 30 A C, D, E. A 30 A.,, CGI OLS.,
24, 40 3 4. 2,. 9., 2, 2, 2003 2.., 2,, OLS, t. 2 2003 378, 2004 351, 2 2003 47, 2004 56. 2003 2004 2 2 2 2 0.085 ** (2.48) ( ) 2-0.001 (-1.11) 30 6.461 *** (5.30) 1.031 (0.12) 0.006 (1.37) 0.002 ** (2.06) 0.884 (1.16) 0.195 * (1.82) 0.000 (0.10) -8.155 (-1.58) 12.812 (0.78) 0.000 (0.03) 0.664 (1.62) -6.554 (-1.10) 0.010 *** (2.87) -0.001 ** (-2.01) 4.327 *** (3.54) N/A (N/A) 0.001 (0.20) 7.781 (0.95) 1.165 (1.35) 0.308 *** (3.00) 0.008 * (1.90) -10.013 ** (-2.56) 11.441 (1.01) -0.003 (-0.37) 7.653 * (1.74) -13.741 *** (-2.97) 326 37 301 46 R 2 0.14 0.48 0.14 0.53 : *, **, *** 10%, 5%, 1%.
25 (2003 86.1%, 2004 85.8%) (2003, 2004 0%) 7.4~8.5, 2 (2003, 2004 0%) (2003 70.2%, 2004 85.8%) 13.7~26.4. V..,.,.,,.. CGI Frn t t 2 = f ( Frnt, CGI t-1, Frnt- 1, ( l arg estshr), othercontrol var iables) + ht KK EBIT f ( CGI t, CGI t-1, Frnt 1,, othercontrol var iables) + e t KKKKK TA = - ( 2) ( 1) (1) (2),.
26, 40 3 4.,,, 30,,.,,., FrnHAT t CGIHAT t Frn t CGI t. (1) FrnHAT t, (2) CGIHAT t 2SLS(2-Stage Least Square) 10. 10.,., OLS,.,.,,,,. 4).,.., 4) (2005). (2005),.
27 (1), (2) 2SLS. CGI, Frn. FrnHAT, Frn t, CGIHAT CGI t. Frn t-1 CGI t-1. 2,, 30,, 5. FrnHAT CGIHAT (1) (2) CGI t 0.253 ** (2.27) 0.202 ** Frn t-1 (1.98) 0.649 *** CGI t-1 (12.10) ( ) 2-0.001 (-1.16) Frn t -0.696 (-0.63) 1.052 *** (8.66) 0.384 (0.54) 0.649 *** (4.22) 253 253 (R 2 ) 0.78 0.80 : *, **, *** 10%, 5%, 1%.,.,..,,.
28, 40 3 4 VI.. 2003 2004,,,..,.,,.. OLS t 5%.,.,.,,.,
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30, 40 3 4 Jensen, M. and W. Meckling (1976), Theory of the firm: managerial behavior, agency costs, and ownership structure, Journal of Financial Economics 3, pp. 305-360. Joh, S. (2003), Corporate governance and firm profitability: Evidence from Korea before the economic crisis, Journal of Financial Economics 68, pp. 287-322. La Porta, R., F. Lopez-de-Silanes, A. Shleifer, and R. Vishny (2000), Investor protection and corporate governance, Journal of Financial Economics 58, pp. 3-28. Lemmon and Lins (2003), Ownership structure, corporate governance, and firm value: Evidence form the East Asian financial crisis, Journal of Finance 58, pp. 1445-1468.
31 Foreign Ownership and Corporate Governance 5)Dosoung Choi** Jong Ha Lim** This paper examines whether an increase in foreign ownership improves the quality of corporate governance. Using the survey data on corporate governance compiled by Korea Corporate Governance Service (KCGS) for 2003 and 2004, we computed a composite score of corporate governance (CGI) for each corporation listed on the Korea Exchange. We find evidence that the CGI variable is positively related to an increase in foreign equity ownership, suggesting that foreign investors exerted positive influence on the improvement of corporate governance of the listed corporations in Korea. Especially, such dimensions as Shareholder Rights, Board of Directors, and Disclosure/Transparency are more positively related to the change in foreign equity ownership. The estimation results based on simultaneous equation models show that corporations with high CGI do not necessarily have high foreign ownership, suggesting that increases in foreign ownership brings forth improvement of corporate governance, not the reverse. Keywords: corporate governance, foreign ownership, shareholder rights, board of directors, disclosure, transparency *Professor of Finance, College of Business Administration, Seoul National University **Ph.D. candidate, Fisher School of Business, Ohio State University