As the semiconductor industry grows globally, the ability to attract investments and capital from foreign institutions continues to become more competitive. This paper examines the factors including stock indexes, macroeconomic variables, and company financial statistics which would influence the foreign investment ratio in the Taiwan semiconductor industry according to panel data from 2004 to 2009. The major findings of this study are that three types of variables have significant influence on foreign institution’s preference for firms in Taiwan. These findings could have important decision-making implications either for local investors who want to follow a foreign institution’s investment strategy, or for a firm’s financial managers who want to draw a foreign institution’s attention.
