Why do controlling families of public firms sell their remaining ownership stake?

Research output: Contribution to journalArticle

26 Citations (Scopus)

Abstract

I investigate what leads controlling families of publicly traded firms to sell their remaining ownership stake. The sale of a controlling stake is best explained in the context of theories of the firm related to optimal risk bearing, the separation of ownership and management expertise, the CEO succession process, and the monitoring provided by outside blockholders. A timing explanation is only marginally supported. The sale of a controlling stake is not explained by insufficient financial resources to fully invest in growth opportunities. This study offers insights into the final stage of the process in which entrepreneurs sequentially sell their firm to outside parties and also identifies the nature of costs of concentrated ownership. COPYRIGHT 2007, SCHOOL OF BUSINESS ADMINISTRATION, UNIVERSITY OF WASHINGTON.

Original languageEnglish (US)
Pages (from-to)339-368
Number of pages30
JournalJournal of Financial and Quantitative Analysis
Volume42
Issue number2
StatePublished - Jun 2007

Fingerprint

Public firm
Ownership
Theory of the firm
Monitoring
Growth opportunities
Costs
Entrepreneurs
Business Administration
CEO succession
Expertise
Blockholders
Concentrated ownership
Financial resources

ASJC Scopus subject areas

  • Finance
  • Accounting
  • Economics and Econometrics

Cite this

Why do controlling families of public firms sell their remaining ownership stake? / Klasa, Sandy J.

In: Journal of Financial and Quantitative Analysis, Vol. 42, No. 2, 06.2007, p. 339-368.

Research output: Contribution to journalArticle

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