DP571 Stock Markets and Corporate Performance: A Comparison of Quoted and Unquoted Firms
|Author(s):||Ian Alexander, Colin Mayer|
|Publication Date:||August 1991|
|Keyword(s):||Corporate Finance and Investment, Short Termism, Stock Markets|
|Programme Areas:||Applied Macroeconomics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=571|
This paper examines the influence of stock markets on corporate performance. It compares large private and publicly listed companies in the UK. It finds that, controlling for size and industry, quoted firms invest more and grow more rapidly than unquoted firms. They earn higher profits and pay out a higher proportion of their earnings as dividends. They raise more equity finance but use this to purchase equity in other companies. In contrast, private companies are concentrated in low technology industries. There is therefore no evidence of adverse effects of stock markets on corporate performance. The proposition that firms are involuntarily driven to seek listings, however, cannot be rejected.