We present a model of succession in a firm controlled and managed by its founder. The founder decides between hiring a professional manager or leaving management to his heir, as well as on how much, if any, of the shares to float on the stock exchange. We assume that a professional is a better...

This paper analyses the interaction between legal shareholder protection, managerial incentives, and outside ownership concentration. Legal protection affects both the expropriation of shareholders and the blockholders incentives to monitor. Because of this latter effect and its repercussion on...