Dissecting the Listing Gap: Mergers, Private Equity, or Regulation?

69 Pages Posted: 21 Feb 2019 Last revised: 18 Mar 2022

See all articles by Gabriele Lattanzio

Gabriele Lattanzio

Nazarbayev University

William L. Megginson

University of Oklahoma

Ali Sanati

American University

Date Written: March 18, 2022


The abnormal decline in the number of US public firms is often blamed on merger activity, private equity investments, and stock market regulations. We compare and quantify the effects of these channels on the evolution of the US listing gap in a unified framework. In the US, an extra 100 mergers is associated with 22.01 additional missing public firms, whereas an extra 100 private equity deals is associated with 3.62 fewer missing listings. Regulatory changes, particularly the Sarbanes–Oxley Act of 2002, are also estimated to have a significant role in the decline of US listings. A one standard deviation increase in regulatory costs is associated with a 15.87% expansion of the US listing gap, which is equivalent to 892.8 missing public US firms. We also specify the types of mergers and private equity deals that most strongly affect listings in the US. Finally, we document that listing gaps emerge in other developed economies, with a few years of delay. The non-US listing gaps are driven by similar forces as in the US.

Keywords: Stock listings; Equity financing; Mergers and acquisitions; Private equity; International financial markets; Securities law; Sarbanes–Oxley Act.

JEL Classification: G15; G24; G34; G28; K22

Suggested Citation

Lattanzio, Gabriele and Megginson, William L. and Sanati, Ali, Dissecting the Listing Gap: Mergers, Private Equity, or Regulation? (March 18, 2022). Available at SSRN: https://ssrn.com/abstract=3329555 or http://dx.doi.org/10.2139/ssrn.3329555

Gabriele Lattanzio

Nazarbayev University ( email )


William L. Megginson (Contact Author)

University of Oklahoma ( email )

307 W Brooks, 205A Adams Hall
Norman, OK 73019
United States
(405) 325-2058 (Phone)
(405) 325-1957 (Fax)

HOME PAGE: http://faculty-staff.ou.edu/M/William.L.Megginson-

Ali Sanati

American University ( email )

4400 Massachusetts Avenue NW
Washington, DC 20816-8044
United States

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