The U.S. Equity Listing Decline and the Aggregate Economy

Since a peak in 1996, the number of U.S. companies with shares listed on public stock exchanges have declined by roughly 40%. Over the same period, the private equity market has grown, potentially reducing the benefits to rms for being publically listed for nancing purposes. At the same time, the costs to being publically listed have increased due to regulatory changes such as the Sarbanes-Oxley legislation. In this paper, we explore some of the implications of the decline in U.S. equity listed firms for the aggregate macroeconomy. Using data on costs as a share of revenues through the lens of our model, we nd that costs would have had to increase by 56%. Alternatively, we can use our model to how much bene.ts would have had to decline. The model also suggests that macroeconomic cyclicality has been amplified through more concentrated equity ownership.