This paper examines the financial performance of listed public firms vs. unlisted private firms in the U.K. over the period 2003‐2012. We establish a stylized fact that private firms typically outperform public firms. This finding is robust in various model settings, using alternative matching samples, different definitions of performance, changes in ownership status, and the endogeneity of a firm’s listing decision. We then identify and test three channels that explain higher performance of private firms, and two “counter” channels that favor public firms. First, private firms are more efficient operationally than public firms due to managerial flexibility. Second, the R&D intensity is higher for private than public firms, indicating longer time horizon. Third, private firms have higher controlling ownership, which reduces agency cost. Considering counter channels, we find that the basic result is independent of liquidity or financial resources as the operating profitability is higher for private firms than public firms when they both are financially constrained.
Keywords: private firm, public firm, corporate ownership, exchange listing, operating profit, firm performance
JEL Codes: G32, G34
학회 소식
공지사항
[2015년 제 4차] Do Private Firms Perform Better than Public Firms
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게시일 :
2015-12-30