This paper has two aims. The first aim is to investigate whether poor corporate governance negatively affects equity participation of foreign investors. The second aim is to investigate whether firm-level efforts for better corporate governance attract more foreign investments. Our regression results suggest foreign equity ownership is negatively associated with firms' ownership concentration but is positively associated with firms' efforts for better corporate governance. Interestingly, foreign investors show different behavioral patterns from their domestic counterparts, as the latter group shows less sensitivity to the corporate governance issue than the former group. (C) 2010 Elsevier B.V. All rights reserved.