• Korea Trade Review
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• v.42 no.2
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• pp.227-249
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• 2017

This study investigates whether foreign equity ownership is associated with trading volume. This study establishes null hypothesis indicating that foreign equity ownership is not related to trading volume based on prior studies regarding foreign equity ownership. We measured trading volume as proxy of investors' heterogeneous beliefs. To exam The the hypothesis, we collected sample firms listed on the Korean Stock Exchange from the year of 2001 to the year of 2011 inclusively. Controlling for variables related with trading volume as reported in the previous studies, the regression coefficient for the foreign equity ownership showed statistically significant negative sign. These results indicate that the foreign equity ownership is negatively associated with investors' heterogeneous beliefs. This study contributes to extant literature on foreign equity ownership by providing evidence that foreign equity ownership affects investors' trading decisions. The results also help policy makers in their policy development.