In the 90's Taiwan government has enacted an open policy which introduces stages of internationalization of the stock market in Taiwan. This open policy provides a good opportunity for observing various issues in Finance. this study examines how the announcements of releasing restrictions on direct foreign investment affect stock returns in Taiwan.The daily returns are grouped into eight different industries from January 1990 to March 1996. After conducting an adjusted event study methodology(used by Mikkelson and Partch (1988)), the results show that only few industries are found to have abnormal returns.In conclusion, the announcements of releasing restrictions on direct foreign investment do not significantly impact the overall market in Taiwan.