Despite their considerable contribution to the development of the domestic capital market, foreign investors have been criticized for demanding high dividends from domestic firms, thereby undermining the stability of fund procurement, and for preferring short-term investment outcomes over long-term investments with extended payback periods, thus dampening investment. This study analyzes the impact of foreign investors who are major shareholders holding 5% or more of equity on the investment and dividend policies of the firms in question. It also examines whether foreign major shareholders actually have a positive impact on corporate governance and firm value. Furthermore, it tests whether the role of foreign major shareholders differs depending on the circumstances faced by the firm. The analysis results confirmed that a higher foreign major shareholder stake is associated with a significantly higher dividend payout ratio. In particular, firms that are chaebol affiliates or have better corporate governance and higher firm value exhibited significantly higher dividend payout ratios. However, no direct evidence was found that foreign major shareholders curtail corporate investment. Meanwhile, foreign major shareholders were not found to enhance the value of the firms in question. In particular, for firms with low firm value or poor governance, firm value declined as foreign ownership increased, and no empirical evidence was found to support the claim that foreign major shareholders enhance firm value through improvements in domestic corporate governance. Rather, it was possible to speculate that foreign major shareholders may reduce firm value by investing in firms with poor corporate governance and pursuing private benefits as controlling shareholders.