Is the US public corporation in trouble? Flashcards
Why has there been a decrease in the number of publicly listed firms in the US?
The decrease in publicly listed firms can be attributed to both delisting and firms choosing not to go public. Delisting can occur due to firms no longer being fit for public trading, acquisitions, or voluntary delisting.
What changes are noted in the balance sheets of publicly listed firms?
There has been a decrease in capital investments, while R&D expenditure relative to assets has increased. The use of intangible assets and cash holdings has also seen notable changes.
What trends are observed in the profitability of publicly listed firms?
The cash flow to asset ratio has been decreasing for non-large firms, with an increasing trend of firms reporting negative net income. Operational cash flow has also been declining, despite adjustments for R&D expenses.
How has ownership and payout behavior changed among publicly listed firms?
Leverage has decreased over time, with more firms opting for equity financing. The number of firms paying dividends has decreased, while the ratio of payout has increased. Stock buybacks have become popular among firms.
What are the potential reasons behind the decline in publicly listed firms?
Potential reasons include regulations, acquisitions, preference for keeping company secrets, the influence of institutional investors, alternative funding sources, and the ease of outsourcing. Additionally, consolidation theory may not fully explain the phenomenon, as it primarily affects public firms.
