海角大神

Early reports describe Facebook鈥檚 much-ballyhooed IPO as a dud. This seems to support The Economist鈥檚 worries about the future of the public company, a theme raised by Michael Jensen in a famous 1990 article. Indeed, the corporate form has been hammered lately, the victim of particularly burdensome regulation under the Sarbanes-Oxley Act and other schemes. As noted in the Economist piece, the number of public companies, as well as the number of IPOs, have declined sharply over the last decade.

I鈥檓 certainly a fan of private equity (along with proprietorships, partnerships, cooperatives, and other organizational forms). But, as Art Carden and I discussed in a recent Mises Academy course, reports of the death of the public company are greatly exaggerated. Despite the additional regulatory scrutiny, the agency problems associated with diffused ownership, and other challenges, the corporate form is still an effective means of raising large amounts of capital.

To be sure, corporations benefit from a number of state interventions (though I don鈥檛 think the corporate form itself is one of them, contrary to a widespread view in 鈥渓eft-libertarian鈥� circles). So do all forms of organization. With a diminution of the regulatory state we would see a flourishing of a variety of firms, both public and private.