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The Shrinking Universe of Public Firms
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The Shrinking Universe of Public Firms

Facts, Causes, and Consequences

René M. Stulz
NBER, 2018
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Finance and investment experts note a disturbing pattern in US equity markets: a sharp drop in the number of companies that trade on stock exchanges, along with fewer initial public offerings from new firms. Financial scholar René M. Stulz examines the curious dynamic of diminished company association with US public capital markets. getAbstract suggests this astute report to investors, executives and financial services professionals for its exploration of a stock market puzzle.

Summary

From 1975 to 1997, the number of publicly traded American companies increased by 54%. From the 1997 peak, however, corporate listings on US exchanges have plummeted from approximately 7,500 to 3,627 by 2016. Despite the robust nature of US capital markets, stock exchanges fell some 5,000 listings short of experts’ predicted levels for 2012, “given the size of [the US] population, its economic development, its financial development and its respect for shareholder rights.” Though the population surged from 219 million in 1976 to 324 million in 2016, the United States saw, in the number of “listed firms per...

About the Author

René M. Stulz is a finance professor and director of economic research at the Ohio State University.

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