The information that a direct family member will succeed in management control following the death of a founder can be evaluated in various ways in the capital market depending on the founder's past managerial track record, the duration of the second-generation manager's management training period, and the characteristics of the firm being succeeded. The purpose of this study is to analyze the effect of founder death announcements on the abnormal stock returns and the determinants of abnormal returns for a sample of 38 firms selected from the Korean stock market between January 1, 1980 and May 31, 1995. According to the research results, the stock prices of the overall sample showed no notable pattern on the announcement date or during the periods surrounding it. However, the stock prices of the subsample with high debt ratios declined significantly by 8.386% during the pre-announcement period (AD-30 to AD), which was statistically significant at the 5% level. In contrast, the stock prices of the subsample with low debt ratios increased by 6.534% during the pre-announcement period (AD-30 to AD) and by 1.901% during the two-day period of the announcement date and the following day (AD to AD+1), both statistically significant at the 5% level. This can be interpreted as investors expecting that founder death information would negatively affect stock prices only for the subsample with high debt ratios. Meanwhile, the results of the cross-sectional regression analysis conducted to identify the determinants of abnormal stock returns on the announcement date are as follows: the period during which the second-generation manager participated in corporate management prior to the founder's death (TIME), the magnitude of the founder's managerial performance relative to managers in the same industry (ABILITY), debt ratio (DEBT), and total assets (TA) were found to be statistically significant in explaining differences in abnormal returns on the announcement date.