Question A:
The lower willingness of private firms to go public, combined with the increased number of publicly traded firms being taken private over the last 25 years, is measurably net negative for economic growth.
Responses
Responses weighted by each expert's confidence
Question B:
All else equal, reducing regulatory barriers (including reporting requirements such as Sarbanes Oxley 404) to public listing would substantially increase the share of publicly traded firms in the economy.
Responses
Responses weighted by each expert's confidence
Question C:
The lack of transparency about unlisted private firms' financial performance substantially hinders the efficiency of the allocation of capital.
Responses
Responses weighted by each expert's confidence
Question A Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
|---|---|---|---|---|
 John Campbell |
Harvard | Bio/Vote History | ||
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 John Cochrane |
Hoover Institution Stanford | Bio/Vote History | ||
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It is likely a small net negative for the level of economic activity. Growth is harder. Though, keep track of the counterfactual. Companies are staying private for a reason. Economy only improves if we fix the reason. Forcing more public companies otherwise will hurt.
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 Francesca Cornelli |
Northwestern Kellogg | Did Not Answer | Bio/Vote History | |
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 Douglas Diamond |
Chicago Booth | Bio/Vote History | ||
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 Wenxin Du |
Columbia | Bio/Vote History | ||
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 Darrell Duffie |
Stanford | Bio/Vote History | ||
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 Janice Eberly |
Northwestern Kellogg | Did Not Answer | Bio/Vote History | |
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 Eugene Fama |
Chicago Booth | Bio/Vote History | ||
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 Xavier Gabaix |
Harvard | Bio/Vote History | ||
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 Itay Goldstein |
UPenn Wharton | Bio/Vote History | ||
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 John Graham |
Duke Fuqua | Bio/Vote History | ||
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 Campbell R. Harvey |
Duke Fuqua | Bio/Vote History | ||
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The rise of privates is due to the increased regulatory burden for public firms. You could argue this is positive for growth given private firms have less regulatory scrutiny and may be willing to take extra risk.
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 Harrison Hong |
Columbia | Bio/Vote History | ||
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 Wei Jiang |
Emory Goizueta | Bio/Vote History | ||
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 Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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 Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
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see the explanation following the next two questions
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 Ralph Koijen |
Chicago Booth | Did Not Answer | Bio/Vote History | |
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 Camelia Kuhnen |
UNC Kenan-Flagler | Bio/Vote History | ||
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 Andrew Lo |
MIT Sloan | Did Not Answer | Bio/Vote History | |
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 Michelle Lowry |
Drexel LeBow | Bio/Vote History | ||
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 Sydney Ludvigson |
NYU | Bio/Vote History | ||
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 Matteo Maggiori |
Stanford GSB | Did Not Answer | Bio/Vote History | |
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 Gregor Matvos |
Northwestern Kellogg | Did Not Answer | Bio/Vote History | |
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 Tobias Moskowitz |
Yale School of Management | Bio/Vote History | ||
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It could go either way. Private firms face fewer constraints, which could lead to more growth, but also face less liquid and diverse capital markets, which could hurt growth. Unclear which factors matter more.
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 Stefan Nagel |
Chicago Booth | Bio/Vote History | ||
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 Jonathan Parker |
MIT Sloan | Bio/Vote History | ||
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Great question for quantitative research! In theory, public ownership is more efficient since it allows the same incentive structures for management and greater diversification by owners. So the move to private ownership is a bad sign a priori for economic growth.
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 Christine Parlour |
Berkeley Haas | Bio/Vote History | ||
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Unclear how large financial constraints are
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 Thomas Philippon |
NYU Stern | Bio/Vote History | ||
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going public has positive externalities for scale and price discovery
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 Manju Puri |
Duke Fuqua | Bio/Vote History | ||
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 Michael R. Roberts |
UPenn Wharton | Bio/Vote History | ||
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 Paola Sapienza |
Northwestern Kellogg | Bio/Vote History | ||
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Economic growth is not necessarily linked to the size of the public market, as long as robust alternative sources of capital are available
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 Amit Seru |
Stanford GSB | Bio/Vote History | ||
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 Robert Stambaugh |
UPenn Wharton | Bio/Vote History | ||
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 Laura Starks |
UT Austin McCombs | Did Not Answer | Bio/Vote History | |
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 Jeremy Stein |
Harvard | Bio/Vote History | ||
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 Johannes Stroebel |
NYU Stern | Did Not Answer | Bio/Vote History | |
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 Sheridan Titman |
UT Austin McCombs | Bio/Vote History | ||
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I think there is an effect, but I don’t think it’s particularly large..
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 Stijn Van Nieuwerburgh |
Columbia Business School | Bio/Vote History | ||
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 Toni Whited |
UMich Ross School | Bio/Vote History | ||
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Question B Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
|---|---|---|---|---|
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John Campbell |
Harvard | Bio/Vote History | ||
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John Cochrane |
Hoover Institution Stanford | Bio/Vote History | ||
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It's pretty clear that useless regulatory requirements are part of the reason driving companies out of public listing. Regulation needs to be "better" not "less."
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Francesca Cornelli |
Northwestern Kellogg | Did Not Answer | Bio/Vote History | |
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Douglas Diamond |
Chicago Booth | Bio/Vote History | ||
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Wenxin Du |
Columbia | Bio/Vote History | ||
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Darrell Duffie |
Stanford | Bio/Vote History | ||
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In just about any activity where there is entry at the margin, lowering the cost of entry increases the quantity of entry.
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Janice Eberly |
Northwestern Kellogg | Did Not Answer | Bio/Vote History | |
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Eugene Fama |
Chicago Booth | Bio/Vote History | ||
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Xavier Gabaix |
Harvard | Bio/Vote History | ||
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Itay Goldstein |
UPenn Wharton | Bio/Vote History | ||
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John Graham |
Duke Fuqua | Bio/Vote History | ||
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Campbell R. Harvey |
Duke Fuqua | Bio/Vote History | ||
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If you reduce the cost of being public, it is likely more firms will choose the public route.
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Harrison Hong |
Columbia | Bio/Vote History | ||
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Wei Jiang |
Emory Goizueta | Bio/Vote History | ||
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Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
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There are plenty of reporting burdens that public firms face, not clear that they are all constructive
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Ralph Koijen |
Chicago Booth | Did Not Answer | Bio/Vote History | |
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Camelia Kuhnen |
UNC Kenan-Flagler | Bio/Vote History | ||
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Andrew Lo |
MIT Sloan | Did Not Answer | Bio/Vote History | |
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Michelle Lowry |
Drexel LeBow | Bio/Vote History | ||
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Using econometric techniques to precisely identify the influence of regulatory costs, Ewens, Xiao and Xu (JFE 2024) conclude that regulatory costs "only explain a small part of the decline in the number of public firms."
-see background information here |
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Sydney Ludvigson |
NYU | Bio/Vote History | ||
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Matteo Maggiori |
Stanford GSB | Did Not Answer | Bio/Vote History | |
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Gregor Matvos |
Northwestern Kellogg | Did Not Answer | Bio/Vote History | |
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Tobias Moskowitz |
Yale School of Management | Bio/Vote History | ||
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Directionally this is likely true, but the effect may be small.
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Stefan Nagel |
Chicago Booth | Bio/Vote History | ||
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Jonathan Parker |
MIT Sloan | Bio/Vote History | ||
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Disclosure is critically important for public markets, but it we have overshot optimal legal requirements. The law should also be narrower — not every piece of undisclosed news that moves markets is securities fraud — and not a profit opportunity for (privately-owned) law firms.
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Christine Parlour |
Berkeley Haas | Bio/Vote History | ||
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Thomas Philippon |
NYU Stern | Bio/Vote History | ||
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Manju Puri |
Duke Fuqua | Bio/Vote History | ||
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Michael R. Roberts |
UPenn Wharton | Bio/Vote History | ||
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Paola Sapienza |
Northwestern Kellogg | Bio/Vote History | ||
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Cost of compliances influences choices of going or staying public. Alternative sources of capital are also considerations in this decision. It is difficult to make a general statement.
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Amit Seru |
Stanford GSB | Bio/Vote History | ||
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Robert Stambaugh |
UPenn Wharton | Bio/Vote History | ||
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Laura Starks |
UT Austin McCombs | Did Not Answer | Bio/Vote History | |
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Jeremy Stein |
Harvard | Bio/Vote History | ||
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Johannes Stroebel |
NYU Stern | Did Not Answer | Bio/Vote History | |
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Sheridan Titman |
UT Austin McCombs | Bio/Vote History | ||
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Despite this effect, reporting standards are beneficial.
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Stijn Van Nieuwerburgh |
Columbia Business School | Bio/Vote History | ||
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Toni Whited |
UMich Ross School | Bio/Vote History | ||
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Question C Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
|---|---|---|---|---|
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John Campbell |
Harvard | Bio/Vote History | ||
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John Cochrane |
Hoover Institution Stanford | Bio/Vote History | ||
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Wealthy private investors, channeled through venture and private equity funds, are able to demand the information they need before investing billions. And also able to not demand useless information.
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Francesca Cornelli |
Northwestern Kellogg | Did Not Answer | Bio/Vote History | |
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Douglas Diamond |
Chicago Booth | Bio/Vote History | ||
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Wenxin Du |
Columbia | Bio/Vote History | ||
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Darrell Duffie |
Stanford | Bio/Vote History | ||
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Holding constant the wide distribution of investors typical of public firms, this is obvious. But private firms have far more concentrated ownership, with a substantial degree of direct shareholder oversight.
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Janice Eberly |
Northwestern Kellogg | Did Not Answer | Bio/Vote History | |
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Eugene Fama |
Chicago Booth | Bio/Vote History | ||
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Xavier Gabaix |
Harvard | Bio/Vote History | ||
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Itay Goldstein |
UPenn Wharton | Bio/Vote History | ||
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John Graham |
Duke Fuqua | Bio/Vote History | ||
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Campbell R. Harvey |
Duke Fuqua | Bio/Vote History | ||
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The private investors are likely "qualified" investors and should be able to ask the right questions.
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Harrison Hong |
Columbia | Bio/Vote History | ||
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Wei Jiang |
Emory Goizueta | Bio/Vote History | ||
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Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
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The lack of transparency definitely hinders the allocation and judging the quantitative impact is hard. This is the downside of the rise in the share of private firms.
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Ralph Koijen |
Chicago Booth | Did Not Answer | Bio/Vote History | |
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Camelia Kuhnen |
UNC Kenan-Flagler | Bio/Vote History | ||
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Andrew Lo |
MIT Sloan | Did Not Answer | Bio/Vote History | |
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Michelle Lowry |
Drexel LeBow | Bio/Vote History | ||
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Sydney Ludvigson |
NYU | Bio/Vote History | ||
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Matteo Maggiori |
Stanford GSB | Did Not Answer | Bio/Vote History | |
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Gregor Matvos |
Northwestern Kellogg | Did Not Answer | Bio/Vote History | |
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Tobias Moskowitz |
Yale School of Management | Bio/Vote History | ||
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To the extent performance conveys information, lack of transparency in performance should reduce capital allocation efficiency.
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Stefan Nagel |
Chicago Booth | Bio/Vote History | ||
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Jonathan Parker |
MIT Sloan | Bio/Vote History | ||
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Yes, lack of transparency increases the scope for fraud, and concentrated ownership that can become informed also implies concentrated risks and so reduced investment.
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Christine Parlour |
Berkeley Haas | Bio/Vote History | ||
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Unclear if firms are opaque to relevant investors
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Thomas Philippon |
NYU Stern | Bio/Vote History | ||
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Manju Puri |
Duke Fuqua | Bio/Vote History | ||
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Michael R. Roberts |
UPenn Wharton | Bio/Vote History | ||
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I'm more concerned with the increased cost of capital to private firms, all else equal.
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Paola Sapienza |
Northwestern Kellogg | Bio/Vote History | ||
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The private equity industry has a very steep incentive structure. Efficiency is affected by many factors. I am skeptical that more transparency toward retail investors would change things.
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Amit Seru |
Stanford GSB | Bio/Vote History | ||
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Robert Stambaugh |
UPenn Wharton | Bio/Vote History | ||
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Laura Starks |
UT Austin McCombs | Did Not Answer | Bio/Vote History | |
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Jeremy Stein |
Harvard | Bio/Vote History | ||
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Johannes Stroebel |
NYU Stern | Did Not Answer | Bio/Vote History | |
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Sheridan Titman |
UT Austin McCombs | Bio/Vote History | ||
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Of course this depends on what we mean by substantial. I think the effect is material, but not super large.
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Stijn Van Nieuwerburgh |
Columbia Business School | Bio/Vote History | ||
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Toni Whited |
UMich Ross School | Bio/Vote History | ||
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