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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.

Take-Aways

  • From their 1997 peak, corporate listings on US exchanges have plummeted from approximately 7,500 to 3,627 by 2016. 
  • The biggest factor in the listings decline is the significant increase in merger activity, followed by “delists for cause,” which occur when companies no longer measure up to the listing conditions of an exchange.  
  • “Voluntary delists” – in which enterprises choose to leave public markets in order to go “private or dark” – are relatively rare and play only a minute role in this trend. 

About the Author

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

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