Eclipse of the Public Corporation or Eclipse of the Public Markets?

Craig Doidge · Kathleen M. Kahle · George Andrew Karolyi · René M. Stulz

53 citations0/0 files storedNational Bureau of Economic Research

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Corporate Finance and Governance Financial Markets and Investment Strategies Private Equity and Venture Capital

Abstract

Since reaching a peak in 1997, the number of listed firms in the U.S. has fallen in every year but one.During this same period, public firms have been net purchasers of $3.6 trillion of equity (in 2015 dollars) rather than net issuers.The propensity to be listed is lower across all firm size groups, but more so among firms with less than 5,000 employees.Relative to other countries, the U.S. now has abnormally few listed firms.Because markets have become unattractive to small firms, existing listed firms are larger and older.We argue that the importance of intangible investment has grown but that public markets are not well-suited for young, R&D-intensive companies.Since there is abundant capital available to such firms without going public, they have little incentive to do so until they reach the point in their lifecycle where they focus more on payouts than on raising capital.

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References

2008The law and economics of self-dealing 1999Eclipse of the Public Corporation 2019Are US Industries Becoming More Concentrated?2016The Economics of Disclosure and Financial Reporting Regulation: Evidence and Suggestions for Future Research 2013Where Have All the IPOs Gone?2018Capitalism without Capital 2016The End of Accounting and the Path Forward for Investors and Managers 2006Why Do U.S. Firms Hold so Much More Cash than They Used to?

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2013Firm Volatility in Granular Networks 2016Persistent Operating Losses and Corporate Financial Policies 2020Institutional ownership and governance 2018Intangibles 2020Why Does Equity Capital Flow out of High Tobin’s $\boldsymbol{q}$ Industries?2019The Rise of Star Firms: Intangible Capital and Competition 2017The Evolution of the Private Equity Market and the Decline in IPOs

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