Disclosure Regulation, Intangible Capital and the Disappearance of Public Firms

Sara Casella (), Hanbaek Lee and Sergio Villalvazo

No 2023-050, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: Since the mid-1990s, the number of listed firms in the U.S. has halved, and their public disclosure has become opaquer. To explain these trends, we develop a general equilibrium model where the choices of going public or private and the transparency of voluntary disclosure are characterized analytically. In the equilibrium, the stock market with directed search and the private equity market with random search co-exist. According to the estimation, stricter disclosure regulation and increased intangible capital share are the key drivers of the observed patterns. Lastly, we characterize a policymaker’s trade-off between welfare and productivity and analyze the optimal policy.

Keywords: intangible capital; corporate disclosures; technology diffusion (search for similar items in EconPapers)
JEL-codes: D24 G24 G38 (search for similar items in EconPapers)
Pages: 60 pages
Date: 2023-06-30
New Economics Papers: this item is included in nep-cfn and nep-fdg
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:96649

DOI: 10.17016/FEDS.2023.050

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