The Incredible Shrinking Markets
A recently issued study entitled, “A Wake-Up Call for America,” by the accounting
firm of Grant Thornton LLP highlights a major problem occurring with the US
capital markets these days… Namely, the markets are shrinking. This critically
important report can be found here can
be found here.
The report notes that market structure changes implemented over the last decade
are causing significant, secular declines in the number of publicly listed
companies in the United States. The study reveals how low-cost trade
execution has destroyed the ecosystem that once supported the small business
economy, undermining job creation, economic growth, and U.S. competitiveness.
Some highlights (or lowlights, if you will):
- Since 1991, the number of U.S. exchange-listed companies is down more than
22%, and when adjusted for real (inflation-adjusted) GDP growth, that percentage
balloons to a startling 53%. - 360 new listings per year — a number we’ve not approached since 2000 —
are required to replace the number of listed companies lost in the U.S. In
fact, the U.S. has averaged fewer than 166 IPOs per year since 2001, with
only 54 in 2008. - Up to 22 million U.S. jobs may have been lost because of the broken U.S.
IPO market.
“The United States stock markets are experiencing a disturbing decline,” said
David Weild, Capital Markets Advisor at Grant Thornton LLP and one of the authors
of the report. “Loss of public companies, and loss of the feeder system
to the public markets, is capping opportunity for Americans. This calls for
urgent attention by the Obama Administration, Congress and the U.S. Securities
and Exchange Commission (SEC) to give our economy a fighting chance.”
The study shows that other developed nations are performing markedly better
than the United States when it comes to maintaining or growing numbers of public
companies, and it includes recommendations for improving both public and private
stock markets.
We at IR Alert applaud the work of Grant Thornton LLP for bringing this situation
to light and encouraging debate of this issue.