The Disappearance of Public Firms and the Changing Nature of U.S. Industries

Grullon, Gustavo; Larkin, Yelena; Michaely, Roni

doi:10.2139/ssrn.2612047

Cited by 34 publications

(20 citation statements)

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“…Deng et al (2013) find that mergers by high-CSR acquirers take less time to complete and are less likely to fail than mergers by low-CSR acquirers. In a corporate world that is characterised by high merger activity, such that business survival is largely defined by an 'eat or be eaten' approach (Grullón et al 2017), the implication is that acquisitions may be an important channel for the propagation of sustainable business practices. Moreover, Matvos and Ostrovsky's (2008) finding-that institutional shareholders of acquiring firms often more than offset their losses as acquirors with their gains as shareholders of target firms in the same deals-suggests that common ownership and mergers can be mutually reinforcing mechanisms through which owners can drive the propagation of CSR practices across firms.…”

Section: The Roles Of Shareholders and Other Stakeholders In Buildingmentioning

confidence: 99%

“…Doidge et al (2017) show that the decline is attributable to a combination of factors: 54 per cent is due to a reduction in the number of initial public offerings (IPOs), as documented byGao et al (2013), while the remaining 46 per cent is due to an increase in the number of delistings. The latter, in turn, are attributable to two different trends: (1) an increase in mergers and acquisitions (M&A) activity, with resulting increases in market concentration(Grullón et al 2017); and (2) companies going private due to regulatory changes like the Sarbanes-Oxley Act that have altered the cost-benefit analysis of being public versus being private(Engel et al 2007). …”

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confidence: 99%

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The impact of ownership on building sustainable and responsible businesses

Villalonga¹

2018

JBA

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This article reviews what we know and do not know about the impact of ownership on building sustainable and responsible businesses. It begins by analysing why firm owners are an important driver of responsible business behaviour, and reviews whether such behaviour comes at a financial cost to owners or not. It then discusses how owners drive responsible business behaviour as compared to other stakeholders, reviewing the empirical evidence about the impact of different owner types on various forms of responsible business.My review shows that there is a fair amount of research about certain topics, such as the relation betweeen financial and social performance and about the social and enviromental impact behaviour of the two most prevalent types of owners of public corporations-families and institutional investors-although the cumulative evidence on those topics is far from conclusive. Moreover, there are also a number of gaps in our knowledge that warrant further research to inform recommendations to business leaders and policy makers. These include the relative effectiveness of different types of owners, stakeholders, and organisational forms at building sustainable and responsible businesses; the impact of the recent evolution of capital markets on CSR behaviour; and the social snd enviromental impact of the state, foundations, and employees as owners of corporations. EXECUTIVE SUMMARYEquity ownership of corporations is a critical factor in building sustainable and responsible businesses. The paper sets out to review previous studies of this relationship and adopts a multidisciplinary approach to identify gaps in the understanding of how ownership has an impact on business practices and policies.

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Section: The Roles Of Shareholders and Other Stakeholders In Buildingmentioning

confidence: 99%

mentioning

confidence: 99%

The impact of ownership on building sustainable and responsible businesses

Villalonga¹

2018

JBA

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“…The importance of closely held firms relative to public corporations is not unique to Colombia and other emerging economies, however, but also characteristic of many developed economies including-and increasingly so-the United States'. The World Bank's 2017 Doing Business survey highlights the existence of 5.9 million firms in US, of which only about 4,300 were listed-down from over 8,000 in 1996 (Doidge et al, 2017;Grullón et al, 2017), Doidge et al (2017) rank Colombia fourth, and the United States seventh, out of 54 countries in the decrease in the number of domestic, publicly listed firms between 1996 and 2012. Doidge et al (2017) also show that the decrease results from a combination of factors consistent with the decrease of the net benefits of being publicly listed in the United States: a decline in IPOs as first documented by Gao, Ritter, and Zhu (2013), and an increase in delistings that is largely attributable to acquisition of public companies (Grullón et al, 2017).…”

Section: Appendix: Corporate Governance In Colombiamentioning

confidence: 99%

What Are Boards For? Evidence from Closely Held Firms in Colombia

Villalonga¹,

Dávila²,

Guzmán³

et al. 2018

Financial Management

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Using a large survey database on the corporate governance practices of privately held Colombian firms, we investigate why firms have boards, and how that choice and the balance of power among the board, controlling shareholders, and minority shareholders affect the trade‐offs between control, liquidity, and growth and, ultimately, firm performance. We find that the probability of having a board increases with the number of shareholders and in family firms. When the preferences of controlling and minority shareholders diverge, as with respect to capital structure and dividend policy, boards support controlling shareholders’ decisions, thereby exacerbating the agency conflict between the two groups of shareholders.

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“…In the last two decades, the number of publicly listed companies has been declining in many OECD countries. For example, in the United States, the number of listed companies decreased by half since 1997 (Doidge et al 2017, Grullon et al 2017, with a similar decline observed in the United Kingdom between 1999 and 2011 (Kay 2012).…”

Section: Introductionmentioning

confidence: 81%

Should we worry about the decline of the public corporation? A brief survey of the economics and external effects of the stock market

Koptyug

Persson

Tåg

2020

The North American Journal of Economics and Finance

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. ABSTRACTIn recent years, the number of listed companies has been declining in many countries across the world. This paper provides a selective survey of the literature on the real economic effects of the stock market to assess the potential effects of this decline and determine whether it is likely to continue. The leading economic role of the stock market's primary market, in which firms raise capital by issuing new shares, is to help growing firms secure financing. We discuss providing and certifying information, coordinating investors, and easing the redeployment of capital as the means through which capital allocation can be achieved efficiently. The main economic role of the stock market's secondary market, the trade in existing shares, is to provide liquidity to shareholders, to aid in price discovery, and to provide diversification opportunities. Positive external effects from an active stock market may arise on consumers, labour and private firm due to increased corporate investment, more social responsible business strategies and a more positive business climate. Negative external effects on capital allocation and productivity can arise from short-termism, market mispricing, and increased cross-ownership. Local stock markets can spur innovation and foreign direct investment (FDI) and reduce the risk of early cross-border acquisitions. Given the myriad of useful economic functions the stock market performs, a future entirely absent of public companies is difficult to imagine and the decline is therefore likely at some point to come to an end. Whether we need to worry about the decline depends on the relative importance of the positive and negative external effects, a topic we feel warrants more research.

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The Disappearance of Public Firms and the Changing Nature of U.S. Industries

Cited by 34 publications

References 35 publications

The impact of ownership on building sustainable and responsible businesses

The impact of ownership on building sustainable and responsible businesses

What Are Boards For? Evidence from Closely Held Firms in Colombia

Should we worry about the decline of the public corporation? A brief survey of the economics and external effects of the stock market

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