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We identify negotiated trades of large-percentage blocks of stock as corporate control transactions involving active investors. One year after a trade, stock prices of the firms whose shares are traded are 5.6% higher, and 45% of the chief executives have been replaced. Stock-price increases are larger when a firm performs poorly before the trade, and when management does not resist the blockholder. Even though such blocks often convey the right to choose managers and influence corporate policy, some blockholders eventually acquire the firm, suggesting that corporate control is broader than the right to choose managers.

We identify negotiated trades of large-percentage blocks of stock as corporate control transactions involving active investors. One year after a trade, stock prices of the firms whose shares are traded are 5.6% higher, and 45% of the chief executives have been replaced. Stock-price increases are larger when a firm performs poorly before the trade, and when management does not resist the blockholder. Even though such blocks often convey the right to choose managers and influence corporate policy, some blockholders eventually acquire the firm, suggesting that corporate control is broader than the right to choose managers.