Decreasing number of public companies

January 2019

Recently, multiple research and press articles have discussed the apparent drastic decrease in the number of listed companies in the U.S. Some articles state decreases of 20% to over 50% to support claims that the U.S. stock market is getting concentrated or that private equity investing should be preferred over public equity investing.

A definitive conclusion regarding the attractiveness of private equity relative to public equity in the context of decreasing numbers of public stocks escapes the breadth of this paper. The pages ahead will show that there certainly are fewer publicly traded companies than in years past, and certain regulatory changes may incentivize private companies to stay private for longer. However, there is no conclusive evidence that the U.S. stock market is overly concentrated, or that institutional investors should consider any changes to their strategic allocations to public and private equities based specifically on this issue, holding all else equal.