Listing Gaps, Merger Waves, and the Privatization of American Equity Finance

59 Pages Posted: 21 Feb 2019 Last revised: 3 Sep 2019

See all articles by Gabriele Lattanzio

Gabriele Lattanzio

Southern Methodist University (SMU) - Finance Department

William L. Megginson

University of Oklahoma

Ali Sanati

American University

Date Written: July 18, 2019

Abstract

A cross-country predictive model shows that the U.S. economy has experienced over the last 25 years sharply declining numbers of listed firms, abnormally large volumes of merger activity and private equity investments, and abnormally high levels of stock market capitalization. We combine these trends and document a transition in the U.S. equity financing, from public to private capital raising. We find that the U.S. listing gap exclusively opens from 1997 to 2003 and is mostly explained by the rise of M&A activity and private equity investments since the mid-1990s. Finally, we document that this phenomenon is emerging in other developed economies, with a few years of delay.

Keywords: International financial markets; Stock listings; Equity financing; Mergers and acquisitions; Private equity; Government policy and regulation; Business and securities law.

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

Suggested Citation

Lattanzio, Gabriele and Megginson, William L. and Sanati, Ali, Listing Gaps, Merger Waves, and the Privatization of American Equity Finance (July 18, 2019). Available at SSRN: https://ssrn.com/abstract=3329555 or http://dx.doi.org/10.2139/ssrn.3329555

Gabriele Lattanzio

Southern Methodist University (SMU) - Finance Department ( email )

United States

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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