{"id":8290,"date":"2021-10-11T12:48:15","date_gmt":"2021-10-11T12:48:15","guid":{"rendered":"http:\/\/TheNextWeb=1369501"},"modified":"2021-10-11T12:48:15","modified_gmt":"2021-10-11T12:48:15","slug":"why-companies-are-choosing-not-to-be-listed-on-the-stock-market","status":"publish","type":"post","link":"https:\/\/www.londonchiropracter.com\/?p=8290","title":{"rendered":"Why companies are choosing not to be listed on the stock market"},"content":{"rendered":"\n<p>Stock markets reached <a href=\"https:\/\/tradingeconomics.com\/united-states\/stock-market#:%7E:text=Historically%2C%20the%20United%20States%20Stock,updated%20on%20October%20of%202021.\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">all-time highs<\/a> in 2021, bringing huge value to the companies riding the wave, even when you allow for the dip in recent weeks. We are also in the midst of a <a href=\"https:\/\/www.cnbc.com\/2021\/07\/26\/ipos-are-on-track-for-a-record-year-as-companies-cash-in-on-sky-high-stock-prices.html\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">boom year<\/a> for flotations, with many boards taking advantage of investor enthusiasm for shares. Yet companies have been delisting from the stock market in even <a href=\"https:\/\/www.investors.com\/news\/publicly-traded-companies-fewer-winners-huge-despite-stock-market-trend\/\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">larger numbers<\/a>, and, in fact, this trend has been going on for some time.<\/p>\n<p>The number of listed companies worldwide peaked at 45,743 in 2014 but had slipped to 43,248 by 2019 <a href=\"https:\/\/data.worldbank.org\/indicator\/CM.MKT.LDOM.NO\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">according to<\/a> the World Bank. The numbers in major markets such as the US, UK, France, and Germany have all been trending down.<\/p>\n<p><a href=\"https:\/\/citywireusa.com\/professional-buyer\/news\/investors-expect-more-listed-companies-to-go-private-in-2021\/a1440407\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">In 2020<\/a>, there were 47 deals to take companies private worth a total of US$40 billion (\u00a329 billion), which was well down from the 62 deals worth US$88 billion in 2019, though the numbers were considerably up in Asia. On the other hand, 2021 has been a huge year: going private is already beyond its previous peak from 2007, with a record number of transactions that have already <a href=\"https:\/\/www.ft.com\/content\/5c1e4817-0a42-4de5-a281-baad2149a40f\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">surpassed US$800 billion<\/a>.<\/p>\n<p><strong>Total listed companies worldwide<\/strong><\/p>\n<figure class=\"align-center zoomable\"><a href=\"https:\/\/images.theconversation.com\/files\/424731\/original\/file-20211005-27-i9tpc5.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip\" target=\"_blank\" rel=\"nofollow noopener noreferrer\"><img decoding=\"async\" src=\"https:\/\/images.theconversation.com\/files\/424731\/original\/file-20211005-27-i9tpc5.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip\" sizes=\"(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px\" alt=\"Graph showing the number of listed companies worldwide over time\" class=\"js-lazy\" data-srcset=\"https:\/\/images.theconversation.com\/files\/424731\/original\/file-20211005-27-i9tpc5.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=600&amp;h=349&amp;fit=crop&amp;dpr=1 600w, https:\/\/images.theconversation.com\/files\/424731\/original\/file-20211005-27-i9tpc5.png?ixlib=rb-1.1.0&amp;q=30&amp;auto=format&amp;w=600&amp;h=349&amp;fit=crop&amp;dpr=2 1200w, https:\/\/images.theconversation.com\/files\/424731\/original\/file-20211005-27-i9tpc5.png?ixlib=rb-1.1.0&amp;q=15&amp;auto=format&amp;w=600&amp;h=349&amp;fit=crop&amp;dpr=3 1800w, https:\/\/images.theconversation.com\/files\/424731\/original\/file-20211005-27-i9tpc5.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;h=439&amp;fit=crop&amp;dpr=1 754w, https:\/\/images.theconversation.com\/files\/424731\/original\/file-20211005-27-i9tpc5.png?ixlib=rb-1.1.0&amp;q=30&amp;auto=format&amp;w=754&amp;h=439&amp;fit=crop&amp;dpr=2 1508w, https:\/\/images.theconversation.com\/files\/424731\/original\/file-20211005-27-i9tpc5.png?ixlib=rb-1.1.0&amp;q=15&amp;auto=format&amp;w=754&amp;h=439&amp;fit=crop&amp;dpr=3 2262w\"><noscript><img decoding=\"async\" src=\"https:\/\/images.theconversation.com\/files\/424731\/original\/file-20211005-27-i9tpc5.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip\" alt=\"Graph showing the number of listed companies worldwide over time\" class srcset=\"https:\/\/images.theconversation.com\/files\/424731\/original\/file-20211005-27-i9tpc5.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=600&amp;h=349&amp;fit=crop&amp;dpr=1 600w, https:\/\/images.theconversation.com\/files\/424731\/original\/file-20211005-27-i9tpc5.png?ixlib=rb-1.1.0&amp;q=30&amp;auto=format&amp;w=600&amp;h=349&amp;fit=crop&amp;dpr=2 1200w, https:\/\/images.theconversation.com\/files\/424731\/original\/file-20211005-27-i9tpc5.png?ixlib=rb-1.1.0&amp;q=15&amp;auto=format&amp;w=600&amp;h=349&amp;fit=crop&amp;dpr=3 1800w, https:\/\/images.theconversation.com\/files\/424731\/original\/file-20211005-27-i9tpc5.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;h=439&amp;fit=crop&amp;dpr=1 754w, https:\/\/images.theconversation.com\/files\/424731\/original\/file-20211005-27-i9tpc5.png?ixlib=rb-1.1.0&amp;q=30&amp;auto=format&amp;w=754&amp;h=439&amp;fit=crop&amp;dpr=2 1508w, https:\/\/images.theconversation.com\/files\/424731\/original\/file-20211005-27-i9tpc5.png?ixlib=rb-1.1.0&amp;q=15&amp;auto=format&amp;w=754&amp;h=439&amp;fit=crop&amp;dpr=3 2262w\"><\/noscript><\/a><figcaption><span class=\"caption\"><\/span><br \/><span class=\"attribution\"><a class=\"source\" href=\"https:\/\/data.worldbank.org\/indicator\/CM.MKT.LDOM.NO\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">World Bank<\/a><\/span><\/figcaption><\/figure>\n<p>Some of these decisions to go private are being driven by aggressive buying by private equity groups such as Blackstone, KKR, and Apollo. In the belief that there are corporate bargains in the wake of the pandemic and Brexit, these investment firms did <a href=\"https:\/\/www.jdsupra.com\/legalnews\/private-equity-firms-hunt-for-value-in-9564289\/\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">US$113.5 billion worth<\/a> of deals in the first half of 2021 alone. That\u2019s more than double the previous six months and the strongest half year since the first half of 2007.<\/p>\n<p>Yet the lure of private equity is not the only explanation for companies walking away from thestock market. So what\u2019s going on, and are they doing the right thing?<\/p>\n<h2>The big turn-off<\/h2>\n<p>For one thing, there is enough money to be found elsewhere that companies don\u2019t need to raise funds through a flotation. The world\u2019s central banks have been increasing the money supply by slashing interest rates and \u201cprinting money\u201d via quantitative easing (QE) since the financial crisis of 2007-09, but the latest round of QE in response to the pandemic has taken this to a whole new level. The current rate of money-supply expansion is <a href=\"https:\/\/wolfstreet.com\/2021\/07\/17\/too-much-money-chasing-too-few-goods-and-services\/\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">faster than<\/a> the growth <a href=\"https:\/\/www.ft.com\/content\/3e45991a-ce3a-4cda-b439-1c18f74ad0c5\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">of economies<\/a>. With lending rates so low, all this money is chasing investments. A stock-market listing begins to seem tedious when you can just borrow money very cheaply instead.<\/p>\n<p>The second attraction with being private is regulation. Listed companies have become <a href=\"https:\/\/www.ipohub.org\/new-pressures-public-company\/\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">tightly regulated<\/a> on the back of corporate-governance disasters such as <a href=\"https:\/\/www.mbaknol.com\/business-ethics\/case-study-worldcom-accounting-scandal\/\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">WorldCom<\/a>, <a href=\"https:\/\/www.bbc.co.uk\/news\/business-58026162\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Enron<\/a>, <a href=\"https:\/\/ethicsunwrapped.utexas.edu\/wp-content\/uploads\/2018\/07\/Raj-Rajaratnam-Insider-Trading.pdf\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Galleon Group<\/a>, and more recently <a href=\"https:\/\/www.reuters.com\/article\/us-germany-wirecard-inquiry-timeline-idUSKBN2B811J\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Wirecard<\/a>. These constraints <a href=\"https:\/\/www.forbes.com\/sites\/forbesfinancecouncil\/2020\/02\/26\/why-more-businesses-are-choosing-to-stay-private\/?sh=1ee628586400\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">have motivated<\/a> many a company to skip public scrutiny by choosing to be private instead.<\/p>\n<p>Another problem with public markets is how illogical they have become. Now that amateur traders can buy and sell shares easily through platforms like eToro and Robinhood, company valuations are at the mercy of their whims. Witness GameStop and other shares going through the roof earlier this year thanks to the Reddit group <a href=\"https:\/\/theconversation.com\/gamestop-im-one-of-the-wallstreetbets-degenerates-heres-why-retail-trading-craze-is-just-getting-started-154584\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">WallStreetBets<\/a>.<\/p>\n<p>Amateur traders can also choose to automatically copy the trades of professionals or celebrity traders on a platform like eToro. One celebrity trader\u2019s decisions in the market can mean that many people make the same trade, increasing volatility across hitherto unrelated assets.<\/p>\n<p>Equally, tweets and memes can send valuations soaring or sinking. A good example was <a href=\"https:\/\/theconversation.com\/bitcoin-what-elon-musks-u-turn-on-tesla-payments-means-for-future-of-crypto-160891\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Elon Musk<\/a> driving up the price of dogecoin by making positive noises about the cryptocurrency on Twitter, including referring to himself as the #Dogefather. No wonder many company boards would rather keep away from such a volatile environment.<\/p>\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\" readability=\"6.6478873239437\">\n<p lang=\"en\" dir=\"ltr\">Do you want Tesla to accept Doge?<\/p>\n<p>\u2014 Elon Musk (@elonmusk) <a href=\"https:\/\/twitter.com\/elonmusk\/status\/1392030108274159619?ref_src=twsrc%5Etfw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">May 11, 2021<\/a><\/p>\n<\/blockquote>\n<h2>Is it worth it?<\/h2>\n<p>Sometimes when business leaders have decided to go private in the past, they have reversed this later. <a href=\"https:\/\/www.theverge.com\/2018\/8\/13\/17644234\/michael-dell-enterprise-technology-consumer-laptop-private-public-emc\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">For example, Michael Dell<\/a> took his computer company private in 2013 only to re-list it five years later. He had got the business into a stronger position that he felt would be recognized by the markets. Musk himself <a href=\"https:\/\/www.cnbc.com\/2018\/08\/08\/elon-musk-wants-to-take-tesla-private--heres-what-it-means.html\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">has mused<\/a> about taking Tesla private, having felt that the car company was being undervalued by the markets in the past, though now it\u2019s a different story after the share price has surged in the past couple of years.<\/p>\n<p>Neither is an improvement in a company\u2019s market sentiment the only argument for staying listed. Greater transparency can be a selling point to investors, and selling shares to them is not the only way to take advantage of this. Companies can always opt for loans or bonds as alternatives \u2013 and hence limit their exposure to social media influencers and amateur traders.<\/p>\n<p>And instead of living in fear of negative sentiment, companies might see it as a challenge and reflect on how to better respond. This might involve intensifying their public relations, advertising, and lobbying strategies to better explain the company to the outside world.<\/p>\n<p>Company executives can still be hurt by big shifts in their share price because this is typically one of the performance indicators that determines what they get paid. But again, delisting isn\u2019t the only way around this problem. Instead, companies can rethink their performance indicators \u2013 perhaps putting more emphasis on environmental performance, for example, in anticipation of the fact that regulations in this area are bound to increase.<\/p>\n<p>One other potential medium-term advantage to being listed relates to regulation. The more companies that go private, the more likely that regulators will impose more rules on them to protect their investors and prevent fraud. They might even be tempted to increase taxes on private companies to make up for the lack of regulatory scrutiny. In this sense, the allure of going private might turn out to be fool\u2019s gold.<!-- Below is The Conversation's page counter tag. Please DO NOT REMOVE. --><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/counter.theconversation.com\/content\/169067\/count.gif?distributor=republish-lightbox-basic\" alt=\"The Conversation\" width=\"1\" height=\"1\" class=\"js-lazy\"><!-- End of code. If you don't see any code above, please get new code from the Advanced tab after you click the republish button. The page counter does not collect any personal data. More info: https:\/\/theconversation.com\/republishing-guidelines --><\/p>\n<p><noscript><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/counter.theconversation.com\/content\/169067\/count.gif?distributor=republish-lightbox-basic\" alt=\"The Conversation\" width=\"1\" height=\"1\" class><\/noscript><\/p>\n<p><em>Article by <a href=\"https:\/\/theconversation.com\/profiles\/karl-schmedders-992608\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Karl Schmedders<\/a>, Professor of Finance, <a href=\"https:\/\/theconversation.com\/institutions\/international-institute-for-management-development-imd-3333\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">International Institute for Management Development (IMD)<\/a> and <a href=\"https:\/\/theconversation.com\/profiles\/patrick-reinmoeller-1194393\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Patrick Reinmoeller<\/a>, Professor of Strategy and Innovation, <a href=\"https:\/\/theconversation.com\/institutions\/international-institute-for-management-development-imd-3333\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">International Institute for Management Development (IMD)<\/a><\/em><\/p>\n<p><em>This article is republished from <a href=\"https:\/\/theconversation.com\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">The Conversation<\/a> under a Creative Commons license. Read the <a href=\"https:\/\/theconversation.com\/stock-market-many-companies-are-choosing-not-to-be-listed-heres-why-169067\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">original article<\/a>.<\/em><\/p>\n<p> <a href=\"https:\/\/thenextweb.com\/news\/companies-not-listed-stock-market-private-syndication\">Source<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Stock markets reached all-time highs in 2021, bringing huge value to the companies riding the wave, even when you allow for the dip in recent weeks. We are also in the midst&#8230;<\/p>\n","protected":false},"author":1,"featured_media":8291,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/www.londonchiropracter.com\/index.php?rest_route=\/wp\/v2\/posts\/8290"}],"collection":[{"href":"https:\/\/www.londonchiropracter.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.londonchiropracter.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.londonchiropracter.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.londonchiropracter.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=8290"}],"version-history":[{"count":0,"href":"https:\/\/www.londonchiropracter.com\/index.php?rest_route=\/wp\/v2\/posts\/8290\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.londonchiropracter.com\/index.php?rest_route=\/wp\/v2\/media\/8291"}],"wp:attachment":[{"href":"https:\/\/www.londonchiropracter.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=8290"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.londonchiropracter.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=8290"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.londonchiropracter.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=8290"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}