Don't blame the stock market for corporate myopia

PUBLICLY-LISTED companies have been disappearing, especially in the US, where the number of public firms has fallen to about 3,500 today from more than 7,500 in 1997. The trend is familiar, but there's still plenty of disagreement over whether it's a cause for concern.

One aspect of the debate involves the question whether public companies are forced by stock-market pressures to favour short-term gain instead of building patiently for sustainable success. Another is whether the trend towards private market activity is taking place in debt as well as equity. The short answers are no and yes, respectively.

A common complaint about public companies is that they focus on quarterly results instead of long-term earnings. If that's true, then the decline in publicly-traded companies could be beneficial. It's a popular theory, but careful study appears to undermine it. Recent US Federal Reserve research suggests that public f…