Credit Suisse’s Global Financial Strategies team has published a new report, “The Incredible Shrinking Universe of Stocks – The Causes and Consequences of Fewer U.S. Equities”
- There has been a sharp fall in the number of listed stocks in the U.S. since 1996.
- While listings fell by roughly 50 percent in the U.S. from 1996 through 2016, they rose about 50 percent in other developed countries. As a result, the U.S. now has a listing gap of more than 5,800 companies.
- The propensity to list is now roughly one-half of what it was 20 years ago. The net benefit of listing has declined.
- Mergers and acquisitions (M&A) are the leading reason for delisting, and initial public offerings (IPOs) are the primary source of new listings. In the last decade, M&A has flourished while IPOs have floundered.
- Regulation has increased the cost of listing and facilitated meaningful M&A.
- As a consequence of this trend, industries are more concentrated and the average company that has a listed stock is bigger, older, more profitable, and has a higher propensity to disburse cash to shareholders.
- Exchange-traded funds have filled part of the list gap.
Click here to read the full report.
See here for a collection of links to other Mauboussin papers.