This study measured the financial performance of 291 foreign multinational enterprise (MNE) subsidiaries operating in Korea using return on assets (ROA) and analyzed the effect of subsidiary CEO nationality (Korean versus foreign) on such performance. The results revealed evidence that subsidiary financial performance deteriorates when the subsidiary CEO is a foreign expatriate dispatched from the parent company rather than a local national. This tendency was particularly pronounced when the subsidiary had a shorter duration of business operations in Korea and when the cultural distance between the home country and the host country was greater. However, no evidence was found that the relationship between CEO nationality and subsidiary performance varied according to parent company size. These results suggest that foreign CEOs generally face considerable difficulties in managing businesses in Korea, and that such difficulties are amplified when the subsidiary lacks local business experience or when substantial cultural differences exist.