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

Craig Doidge, Kathleen M. Kahle, G. Karolyi () and René Stulz

No 24265, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: G18 G24 G28 G32 G35 K22 L26 (search for similar items in EconPapers)
Date: 2018-01
New Economics Papers: this item is included in nep-cfn, nep-ent, nep-law and nep-sbm
Note: CF
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Citations: View citations in EconPapers (17)

Published as Craig Doidge & Kathleen M. Kahle & G. Andrew Karolyi & René M. Stulz, 2018. "Eclipse of the Public Corporation or Eclipse of the Public Markets?," Journal of Applied Corporate Finance, vol 30(1), pages 8-16.

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