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Control Sales in Family Firms


Lynda Livingston is an associate professor of finance, School of Business and Leadership, University of Puget Sound, 1500 North Warner, Tawrna WA 98416.


A large stock sale by an insider can be good news for a firm if it increases the potential for meaningful monitoring. I consider insider sales that represent voluntary releases of voting control by managers who continue to manage their firms, and ask if a manager's willingness to relinquish control is affected by the presence of other blockholders. I found that managers of family firms are much more defensive about maintaining their voting control, especially when there are other family members in management.