How Do Founder-CEOs Sell Their Remaining Ownership Shares? Theory and Evidence

Document Type

Peer-Reviewed Article

Publication Date



Purpose: In this paper, the author attempts to answer an important question upon founder-CEOs' exiting: How do they sell their remaining ownership shares? The literature has largely been silent on this question, and therefore is missing an important piece of the puzzle on the final stage of the founding entrepreneurs' involvement in their companies. Design/methodology/approach: The author uses both theoretical models and empirical methods to examine how founder-CEOs sell their remaining ownership shares. Findings: The author finds that founder-CEOs of high-growth firms and those with high managerial ability are more likely to sell remaining ownership shares gradually rather than suddenly. Moreover, if either the growth or the managerial ability is high, founder-CEOs managing firms with high volatility tend to sell gradually. Originality/value: This paper provides insights into the final stage of founding entrepreneurs' involvement in companies. The methodology of pattern recognition also helps investors and regulators in tracking and monitoring stock trading of founders and other company insiders.


Online ahead of print 29 July 2021.

This work has been supported financially by the Sacred Heart University Research and Creativity Grants (URCG) Program.