The Effect of Foreigners` Net Investments on Korean Stock Prices

????????? ???????????? ?????? ?????????????????? ?????? ??? ???????????? ??????????????? ????????? ????????? ????????? ???????????? ????????? ?????? ??????????????? ??????????????? ???????????? ????????? ????????? ??????????????? ???????????? ?????????????????? ???????????? ??? ??????????????? ??????????????? ?????????????????? ???????????? ????????? ????????? ????????? ???????????? ??????. ??? ????????? ????????? ????????? ????????? ????????? ????????? ???????????? ???????????? ????????? ????????? ???????????? ??? ???????????? ????????? ?????????????????? ????????????. ????????? ????????? ??????????????? ????????? ??????????????? ????????? ???????????? ???????????? ???????????? ??????????????? ????????? ??? ????????? ?????????. ?????? ???????????????????????? ??????????????? ???????????? ???????????? ????????? ?????? ??????????????? ????????? ????????? ?????????????????? ????????? ????????? ?????? ???????????? ??? ????????? ????????????(Chuhan, 1994)??? ?????? ???????????? ??????????????? ????????????????????? ???????????? ????????? ???????????? ????????? ????????? ?????????????????? ???????????????. ??? ??????, ????????????????????? ????????? ???(+)??? ????????? ???????????? ????????? ??????????????? ??????????????? ???????????? ????????????????????? ????????? ?????? ????????? ????????? ????????????. ??????, ????????????????????? ?????????????????? ????????? ????????? ????????? ???????????? ????????? ???????????????. ??? ??????????????? ????????? ????????? ????????? ????????? ???????????? ????????? ???????????? ????????? ????????? ??????, ??????????????? ?????? ???????????? ?????? ??? ????????????????????? ??????????????? ????????? ????????? ????????? ????????? ?????????????????? ????????? ?????? ????????? ????????? ??? ????????? ?????? ?????????????????? ????????????????????? ???????????? ?????? ???????????????. Foreign investors have become the most influential group in Korean stock market. There are controversial views whether they are either positive or negative to the firms they are investing and the stock market as a whole. Some people say that foreign money is harmful to the growth of the corporations mainly because it is short term investment and others say that foreign money helps firms to raise their values by improving corporate governance and securing transparency in management. This study intends to explore the real effect of net foreign investments on the Korean stock market and to see whether these influences, if any, vary according to the company’s attributes. For this purpose, this study concentrates on finding real effects of foreign investment using foreign net investment as an independent variable and investigates how the net effect of foreign investment changes according to company’s size and liquidity, considered the most important factors for foreign investors to make an international investment decision, especially in emerging markets according to Chuhan(1994). In conclusion, this study finds that foreign net investment affects the stock price positively and the bigger the company’s size is, the bigger those effect is. On the other hand, the scale of the stock trading does not affect the effect of foreign net investment. The contribution of this study is to find not only that foreign investment is able to affect the stock price p