Why Are There Fewer Publicly-traded Companies Today?
Charles E. Hoffman
Dean, UMSL Business
With a small increase this year, the number of companies publicly traded on U.S. stock exchanges increased to over 5,000. But this total is down from over 8,000 before the dot-com bubble burst, the dramatic rise in private equity firms, and the overreaction from Congress and federal regulators that led to new rules such as Sarbanes Oxley.
Publicly traded companies are under intense pressure to produce quarterly increases in sales and profits, sometimes to the long term detriment of the enterprise. The public company CEO has to balance long term shareholder value generation with the demands of the competitive market, employee interests, customer demand, and his or her board of directors, in addition to pleasing analysts and institutional shareholders with steady, impressive growth. It’s no wonder that many companies are choosing to remain privately held. The long term needs of the business can be addressed without stock market confusion and misunderstanding.