Have exchange-listed firms become less important for the economy?

Have exchange-listed firms become less important for the economy?

Frederik Schlingemann, René Stulz

Series number :

Serial Number: 
731/2021

Date posted :

February 23 2021

Last revised :

February 23 2021
SSRN Share

Keywords

  • stock market • 
  • value added • 
  • listing • 
  • market capitalization • 
  • Employment

The firms listed on the stock market in aggregate contribute less to total non-farm employment and GDP now than in the 1970s. A major reason for this development is the decline of manufacturing and the growth of the service economy as firms providing services are less likely to be listed on exchanges.

A firm’s stock market capitalization is much less instructive about its employment now than in earlier years. Listed stock market superstars account for less employment than they did in the 1970s. Market capitalizations have not become systematically less informative about firms’ contribution to GDP.

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