The Falling Number of Us Listed Stocks : Is Market Structure to Blame?

The number of publicly listed companies in the US has halved since 1996, prompting policymakers to question why stock markets have become less attractive for capital raising. We show that, contrary to conjectures, changes in market structure that reduced tick sizes are not the culprits. We show that company managers do not undo tick size changes through stock splits. Furthermore, IPOs occur at similar price levels after the changes, suggesting new issuers are also unconcerned about smaller tick sizes. Liquidity improves for firms in all size groups, and small stock valuations are not adversely affected by the tick size changes