Practical analysis for investment professionals
30 September 2013

The Decline in Stock Listings Is Worse than You Think

Posted In: Equity Investments

The decline in stock listings in the United States has been well documented by industry professionals and the media alike. Based on my own calculations, though, commentators seem to be missing a larger and potentially more alarming story: Equity listings worldwide, not just in the United States, have dropped precipitously. The data thus fly in the face of a bedrock belief about capitalism and free markets: that one of the strengths is the ease with which new enterprises can fund themselves through public equity listings.

Threading the numbers together takes a bit of work. Based on data covering 142 stock exchanges since 1975 that I compiled from multiple sources, including the World Federation of Exchanges, University of HoustonUniversity of VirginiaJournal of Finance, and CFA Institute, I estimate that the number of global stock listings is down by 16.8% since peaking in 1998. More specifically, the number of global equity listings stood at just 46,674 at the end of 2012 after peaking at 56,119 in 1998.

The data show that equity listings have declined in every major region, including the United States, Europe, and Asia Pacific:

  • In the United States, total stock listings peaked at 9,253 in 1997 and declined to a paltry 4,916 at the end of 2012 — down by an astonishing 46.9%!
  • Europe’s equity listings peaked in 2007 at 14,008 and stood at 10,844 at the close of 2012 — a decline of 22.6%.
  • In the Asia-Pacific region (including Australia), equity listings have only fallen 4.7% to 15,169 from a 2010 peak of 15,909. Yet it is still a drop.

Global Equity Listings

Even in smaller markets, the number of equity listings has dropped dramatically — from India and the surrounding countries to the Middle East and North Africa to Russia and Central Asia to Sub-Saharan Africa. In fact, if you exclude the growth in equity listings in the Americas (not including the United States) and Asia Pacific, the decline in equity listings for all other regions averages 48%.

Number of Equity Listings (1975–2012)
Number of Equity Listings (1975–2012)

What explains this mystery? Is it the decline in the number of initial public offerings? Could it be an increase in the number of corporate bankruptcies? How about an increase in the number of mergers and acquisitions taking equity listings off stock exchanges? Or perhaps the decline in stock listings is a result of the recent trend of businesses taking themselves private? Of course, the decline of equity listings could well be a combination of all of these factors.

One reason that has been put forward to explain the decline in the United States simply does not hold water. Namely, that onerous regulation has led to capital flight. If so, the data counter that claim, as listings are definitively down globally and in every region. In fact, the decline in public equities is unquestionable and should be a grave concern to both investors and policy makers alike.


Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.

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About the Author(s)
Jason Voss, CFA

Jason Voss, CFA, tirelessly focuses on improving the ability of investors to better serve end clients. He is the author of the Foreword Reviews Business Book of the Year Finalist, The Intuitive Investor and the CEO of Active Investment Management (AIM) Consulting. Voss also sub-contracts for the well known firm, Focus Consulting Group. Previously, he was a portfolio manager at Davis Selected Advisers, L.P., where he co-managed the Davis Appreciation and Income Fund to noteworthy returns. Voss holds a BA in economics and an MBA in finance and accounting from the University of Colorado.

Ethics Statement

My statement of ethics is very simple, really: I treat others as I would like to be treated. In my opinion, all systems of ethics distill to this simple statement. If you believe I have deviated from this standard, I would love to hear from you: [email protected]

32 thoughts on “The Decline in Stock Listings Is Worse than You Think”

  1. bdeora says:

    This is very interesting data point.

    1. Hi Biharilal!

      I agree! Would you mind sharing what you found interesting about it?

      With smiles,


  2. Matt says:

    Very interesting, especially from a valuations standpoint.

    1. Hello Matt,

      Are you saying it is interesting data from the point of view that a lower supply of shares to invest in, along with fixed or increasing demand would equal a price increase in stock market levels? If so, yes, I agree this story may help to explain increasing stock market valulations.

      With smiles,


      1. Matt says:

        Yup – exactly what I meant. It will be interesting to see how the decline in liquid investments are impacted by baby-boomers drawing on their capital over the next 10 – 20 years. Curious if savings rates among young adults are enough to counter over time.

        1. Hi Matt,

          Thanks for clarifying.

          I have a somewhat unusual take on the liquid vs. illiquid discussion. Namely, that when most people talk about liquidity they are talking about principal liquidity. Yet, there is also ‘return on capital’ liquidity, too.

          For example, when Twitter goes public it will have principal/share price liquidity, but it will be years and years until individual investors are paid a dividend/return on capital liquidity. When looked at in this way rental properties suddenly become a liquid investment as the rental income is received as cash even if it may be difficult to sell an individual property.

          Another example, I have owned a convertible preferred stock for almost ten years. My yield on cost basis is 18%, I received my entire principal back in the form of dividends several years ago, even though the convertible preferred security itself is ‘illiquid.’

          One final example. What about education? I will never be able to get my principal back, yet education is highly liquid as represented by my ability to get paid for what I know and my ability to get paid for teaching what I know. But is education a liquid asset?

          Hopefully food for thought,


  3. Chethan Pai says:

    “In the United States, total stock listings peaked at 9,253 in 1997” & “Europe’s equity listings peaked in 2007 at 14,008” – these two points indicate that the peaking of the number of listings, on an uptrend, was cut down by the financial crises. So I believe it is the economic situation forcing companies’ bankruptcy and the restructuring through M&A seems to be more likely reason. As for the companies taking a private route than being public should have resulted lesser growth rather than decline.

    Thanks Jason for this lovely insight!

    1. Hello Chethan,

      Thank you for sharing your own insights with the readers. The first crisis in the U.S. was the bubble popping in late 2000, early 2001. The decline began a full 3-4 years prior to those dates. So not sure about the reasoning as it relates to the U.S. As it relates to European equities, what you describe may be true. Hard to say exactly for sure without going through the history of all of the decisions that led to the declines. I think your explanation may be a part of the story, though : )

      With smiles,


  4. Rémy says:

    Great piece of work, thank you for sharing. I am really surprised the trend is similar for emerging stock exchanges. It would be really interesting to know what are the specific reasons to better understand shifts in capital markets.

    1. Hello Rémy,

      I agree, it would be a very interesting area for possible research for someone: why have the number of stock listings declined so rapidly and globally?

      Thank you for your interest in the piece!


  5. brandon says:

    My opinion is that this is due to increased capital raising in private placements of unregistered securities. Read the SEC Final Rule release for the allowance of general socititation of unregistered securities under Rule 506.

    1. Hi Brandon,

      To ensure that I understand you correctly, are you referring to the U.S. data specifically, or to the entire global data set? If to the U.S. you may be right, but I am not sure how the SEC Final Rule release for Rule 506 would affect a decline in listings in Madagascar.

      With smiles,


      1. brandon says:

        Yes, I should have been clearer. I was referring to the U.S. only.

  6. brandon says:

    Exempt offerings play a significant role in capital formation in the United States. Offerings conducted in reliance on Rule 506 account for 99% of the capital reported as being raised under Regulation D from 2009 to 2012, and represent approximately 94% of the number of Regulation D offerings.190 The significance of Rule 506 offerings is underscored by the comparison to registered offerings. In 2012, the estimated amount of capital reported as being raised in Rule 506 offerings (including both equity and debt) was $898 billion, compared to $1.2 trillion raised in registered offerings.191

    1. Hi Brandon,

      Thank you for summarizing some of the important information about Rule 506 – it sounds as if you work for an underwriter. Thanks too for the SEC link.

      With smiles,


  7. Barbara Petitt says:

    Could it be that issuers no longer need IPOs to reach their objectives? We often assume that IPOs are about raising funds, but research by Brau and Fawcett (“Initial Public Offerings: An Analysis of Theory and Practice”, Journal of Finance, 61(1), February 2006, pp. 399-436) shows that this is not the number one motivation for most companies. Having a currency to make acquisitions and being more visible are key motivations behind IPOs. Companies are more cautious about making acquisitions thee days, and they now have other (and perhaps better and cheaper) ways to achieve visibility. So perhaps they no longer need IPOs as much as before?

    1. Hello Barbara,

      Thank you for sharing the paper above and your thoughts. I agree that this rationale is a part of the story about the decline in stock listings.

      With smiles,


  8. Vernon says:

    very interesting research. I would opine that the cause is a combination of most or all of the causes you listed, altogether magnifying the data you gathered. personally, i think, on the one extreme, regulation has had a material impact at least on the US, and yet, to the other extreme, lack of regulation and the presence and seeming increase in graft and corruption also has something to do with it. Globally, politically, we have seen a trend toward soft socialism and/or statism in many developed countries including the US. We know these trends to have a quelling effect on free markets. These are observations i feel i have noticed in recent years

    1. Hello Vernon,

      If I hear you correctly you are saying you see a regulatory continuum at play here, with one side bounded by too much regulation, and the other side bounded by too little regulation; and both extremes lead to a decline in equity listings. Did I get that right?

      Regarding the move to statism. I wonder if you would mind sharing when you believe that started happening. We could then compare that to the data.

      Thanks again for sharing your point of view with readers.

      With smiles,


  9. Mary Hudson says:

    When did dot.coms peak?

    1. Hi Mary,

      It depends on how you measure it, of course. In other words, which stock market index do you want to use to measure a peak. But, in general, most of the indices in the era peaked in the fourth quarter of 2000. This is a full three years after the start of the decline in equities in the U.S.



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  11. Yves says:

    If we look at the quantum of listings as a function of supply/demand, it appears that stocks are cheap; otherwise, the supply would be abundant and growing (or is it sufficiently abundant already and it was excessive earlier?). Using Barbara Petitt’s observation, shares are not priced well enough (comparing to debt perhaps?) to be useful as a currency for acquisitions.

  12. Hello Yves,

    Thank you for sharing your viewpoint on the issue. I would appreciate hearing more of the details of your thoughts.

    While I think that supply and demand is a useful mental model, I also think that when applied simplistically the outcomes become less descriptive. Here I am referring to the fact that demand for stocks is fairly easily had: I have 40 euro and I want a share, therefore I open an account and place a buy order. Whereas, to supply stocks to the marketplace incurs massively disproportionate costs on the supplier, relative to those that would demand the same stock. Given that there are such asymmetric costs at play I think any rich analysis using supply and demand has to factor in the benefits vs. costs of supplying stocks. Given the declining supply, I think one would have to conclude that the costs, relative to the benefits, must be on the rise. Or, put in the most affirmative way possible, the acceleration in the benefits of supplying stocks is not keeping pace with the acceleration in the costs of supplying stocks.

    With smiles,


  13. Jay Weinstein says:

    I don’t have any hard data, but it is my impression that with the significant costs of going public and being public combined with the disappearance of a lot of the small regional underwriters across the US, the market cap hurdle to go public is simply way too high for most private companies. It seems to me they end up with private equity or remaining private.

  14. Hi Jay,

    Many of my friends would agree with you. I would also add that many regional commercial banks now finance larger private companies better, as well. Whatever the cause, I think there is an interesting story here.

    Thanks for your comments!


  15. Kouji says:

    If you look at long term asset allocation, public equity investment has generally suffered at the expense of alpha products, real assets, and private equity. Page 10 of the 2010 Yale Endowment annual report provides a stark example.

    If the best companies no longer want to go public and/or the best investors no longer spend as much time in the public markets, we have a tiered investment world where only the richest have access to the best ideas. That does not sound like good public policy; on the other hand, I am not sure if restricting the development of non-public equity markets is a prudent one either.

    Will the public markets become anachronistic in our investment time frame? Is that a positive or negative development for investors and society?

    1. Hello Kouji,

      Very interesting points all, and thank you for sharing them with the audience.

      Point for clarification: are you referring to U.S. public companies, or companies globally?

      Global GDP marches onward so capital formation and returns on capital are still happening. Further, global GDP growth is roughly in line with historic GDP growth. Are we in an era, with nearly ubiquitous information where the public traded company is, as you said, anachronistic?

      Feel free to share more of your thoughts!


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