Foreign ownership in the Taiwan stock market - An empirical analysis

Chihuang H. Lin, Cheng Yi Shiu

Research output: Contribution to journalArticlepeer-review

62 Scopus citations


This paper investigates foreign ownership in the Taiwan stock market from 1996 to 2000. From the perspective of informational asymmetry, foreign investors appear to favor large firms and low book-to-market stocks. Analytical results show that foreign investors strongly prefer firms with high export ratios with which they are more familiar on account of their higher foreign sales. Foreign investors hold more shares of high beta stocks than of low beta stocks for small firms. However, this result does not hold for large firms, implying that large firms have lower investment barriers than small firms. Foreign investors, due to their different tax status, may also hold slightly more stocks with low dividend yield. However, evidence for this assertion is inconclusive, with only a weak effect displayed by the sample considered here.

Original languageEnglish
Pages (from-to)19-41
Number of pages23
JournalJournal of Multinational Financial Management
Issue number1
StatePublished - Feb 2003


  • Emerging markets
  • Foreign ownership
  • International portfolio selection


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