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

24 Pages Posted: 29 Jan 2018

See all articles by Craig Doidge

Craig Doidge

University of Toronto - Rotman School of Management

Kathleen M. Kahle

University of Arizona - Department of Finance

George Andrew Karolyi

Cornell University - Samuel Curtis Johnson Graduate School of Management

René Stulz

Ohio State University (OSU) - Fisher College of Business

Multiple version iconThere are 3 versions of this paper

Date Written: January 2018

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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Suggested Citation

Doidge, Craig and Kahle, Kathleen M. and Karolyi, George Andrew and Stulz, René, Eclipse of the Public Corporation or Eclipse of the Public Markets? (January 2018). NBER Working Paper No. w24265. Available at SSRN: https://ssrn.com/abstract=3112077

Craig Doidge (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6
Canada
416-946-8598 (Phone)

HOME PAGE: http://www.rotman.utoronto.ca/FacultyAndResearch/Faculty/FacultyBios/Doidge

Kathleen M. Kahle

University of Arizona - Department of Finance ( email )

McClelland Hall
P.O. Box 210108
Tucson, AZ 85721-0108
United States
520-621-7489 (Phone)

George Andrew Karolyi

Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )

Ithaca, NY 14853
United States

René Stulz

Ohio State University (OSU) - Fisher College of Business ( email )

2100 Neil Avenue
Columbus, OH 43210-1144
United States

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