Public Markets for the Long Term: How Successful Listed Companies Thrive
Report presents strategies to mitigate short-term pressures
FCLTGlobal, has released a new report highlighting the benefits of public markets on long-term value creation. The report, Public Markets for the Long Term: How Successful Listed Companies Thrive, explores the rise of private capital and the presence of these markets alongside traditional public markets.
Today, private capital stands at record levels and the success of venture capital-funded unicorns suggests to some that public markets are outdated. A closer look at the data suggests that, for large companies driving the greatest share of wealth and job creation, public markets are essential. Among top tech companies, 96 percent of total value has been created during their time as public companies. Over the last 50 years, 92 percent of corporate job creation has occurred after companies IPO. Although smaller companies rely more on private capital than before, the biggest players continue to turn to public markets for the capital they need to thrive.
“While private capital has grown over the last few years, especially with the explosion of the privately funded tech sector, the public markets remain vital for broad participation in wealth creation and access to capital,” said Sarah Williamson, FCLTGlobal’s Chief Executive Officer.
Despite the inherent short-term pressures of public markets, for many companies, they remain an integral element of their long-term growth. Observing these best practices had led FCLTGlobal to identify several clear, actionable strategies that companies can use to make public markets work for them.
“Fostering a long-term focus within a listed company starts from the top. Tactics such as targeting engagement toward long-term shareholders, building a strong and focused board, and ensuring an ownership mindset among directors can set the tone and create long-term value for their investors,” said Williamson.
The project references over 70 independent sources on global public and private market figures, as well as original data compiled by FCLTGlobal’s research staff based on public market activity covering the past five decades.
FCLTGlobal is a 501(c)(3) not-for-profit dedicated to developing practical tools and approaches that encourage long-term behaviors in business and investment decision-making. It takes an active and market-based approach to achieve its goals. By conducting research and convening business leaders, FCLTGlobal develops tools and generates awareness of ways in which a longer-term focus can increase innovation, economic growth and future savings. FCLTGlobal was founded in 2016 by BlackRock, Canada Pension Plan Investment Board, The Dow Chemical Company, McKinsey & Company, and Tata Sons out of the Focusing Capital on the Long Term initiative. Its membership encompasses asset owners, asset managers and corporations from around the world. Please visit www.fcltglobal.org for more information.