Supply of equities falls in decade following crisis

Data from the World Bank show that there were 4,397 listing companies in the U.S. at the end of 2018.

The number of U.S. public companies fell below the 5,000 mark in the years preceding the 2008 global financial crisis for the first time since 1980 and not much has changed since.

Two other significant declines in public companies followed large market downturns — the popping of the dot-com bubble in the early 2000s and the days and weeks following Sept. 11, 2001. These events resulted in companies failing or filing for bankruptcy, but also created acquisition opportunities for relatively better positioned companies. And while the opportunity set has shrunk for investors, equities as a whole haven't missed a beat, currently sitting at or near record market caps. One argument is that the lower supply of equity offerings has artificially increased these valuations by virtue of basic economics. A 2018 paper in the Harvard Business Review, however, suggests an evolution is occuring.

The paper points to the increasing digital nature of the U.S. economy and how companies that once needed large infrastructures to operate fell behind due to bloated operations and high fixed costs. The authors also cite the growing influence of private equity and the specialized, hands-on involvement these firms provide nascent companies that the "profit-now" nature of public-equity markets as little patience for.