AT THE BELL
Where Have All the Public Companies Gone? W
John Moten, IRC NIRI Chair SVP, Investor Relations Aventiv Technologies
hen I wrote this column, we were in the midst of the Q3 earnings season with the quar- terly routine of pulling together financial reports and drafting press releases, scripts, and presentations. It was a busy time for us all!
Te trepidation for investor relations (IR) professionals during earnings season is palpable. Yet, we successfully manage this process to disclose transparent data to our stakeholders. We play a vital role in the efficient functioning of the capital markets by disclosing material information that builds trust and transparency. However, the number of public companies is shrinking, which could have a long-term impact on our profession. Earlier this year, Jamie Dimon, Chairman and CEO of JP Morgan Chase, highlighted the decrease in
the number of public companies. According to his firm’s analysis, there were 7,300 public companies in 1996 compared to 4,300 companies today. Other studies also indicate that the number of public companies has declined over the last 28 years. It is important to note that there are not 40% fewer companies, but they are increasingly staying
private. Two of the biggest factors for the decline in public companies are the number of companies backed by private equity (P/E) and the increasing cost and burden of regulations. Te number of pri- vate companies in the United States backed by P/E firms has grown from 1,900 to 11,200 during the past two decades, according to JP Morgan data. While we cannot control companies going private, we do have a voice in regulation. Te increasing
cost of regulations, intensified reporting requirements, and shareholder activism are key factors in the decline of public companies. During the past two decades, NIRI has worked tirelessly to address these issues, but we need your help. In September, 40 NIRI members from across the country, including NIRI Board Members and
chapter leaders, met in Washington, D.C. for the annual NIRI Legislative Fly-In to be briefed on NIRI regulatory priorities and to advocate for our issues with members of Congress and the U.S. Securities and Exchange Commission (SEC). Among our legislative and regulatory priorities are creating an SEC Public Advisory Committee, modernizing Section 13F of the Securities Exchange Act, SEC climate change disclosures, and proxy solicitation reforms. Tese issues are of vital importance to IR professionals as these reforms foster greater transparency in the capital markets, reduce regulatory red tape, and encourage the growth of more public company listings. In this issue of IR Update, many of these and other issues are discussed. Te Chapter Spotlight
section has a great article on the NIRI Dallas/Fort Worth Chapter engaging IR professionals at the local level. Te CEO Spotlight features an interview with Tamir Poleg, CEO of Te Real Brokerage, Inc. Tere are several great quotes from Poleg in that interview, but the one that resonates with me is, “IR acts like an internal sell-side analyst, providing a balanced view of both our strengths and the chal- lenges we face.” In addition, there are informative articles on outreach to ETF investors, NIRI Ethical Principles, artificial intelligence, and of course, ESG. Happy reading! IR
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niri.org/ irupdate
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