Regulators must set governance standards in this age of disruption

BY now, it is well known that technology is disrupting many businesses and shortening company lifespans at an alarming rate. In an August 2017 report for example, Credit Suisse said the average age of a company listed on the S&P 500 has fallen from almost 60 years in the 1950s to less than 20 years currently.

Another study recently reported that the average tenure of S&P companies is forecast to shrink to just 12 years by 2027 and that at the present rate, about half will be replaced over the next 10 years.

Fund managers Schroders, in a June 2018 article titled "What is the point of the equity market?", took note of the declining numbers of companies seeking a listing as well as remaining listed: "The number of US-listed companies has shrunk by around half over the past 20 years, and our analysis finds a similar collapse in the UK and parts of Western Europe. Declining appetite for IPOs and consistently higher numbers of companies delisting (mainly due to mergers and acquisitions) are to blame." Schroders further added that cheap debt, the ready availability of alternative funding such as private equity, high compliance costs of being listed and rising short-termism, are responsible.