Grant Thornton, an accounting firm, put out a new report this month seeking to address a “precipitous decline in the number of publicly listed companies.”  While I am unclear about the solutions they pose to the problem as they are out of my scope of knowledge, I do find the issues addressed to be very real, and highly disturbing.

The argued main cause of delistings in the US exchanges is from a process they termed “The Great Delisting Machine,” or a trend towards lower commission and trading costs, which they see as starting back in 1996 with the birth of online brokerages.  One of the damaging products of this Delisting Machine is “Casino Capitalism.”  Casino Capitalism they claim is pushing out long-term quality investors through such means as: black pools, hedge funds, naked shorts, predatory shorts, high-frequency trading firms, OTC derivatives and credit-default swaps, credit surrogates (see full report for detail).

At this point, you may be wondering the obvious question, and the one assumed by this report: is a decline in the amount of publicly listed companies a bad thing?  Their answer is an emphatic YES.  The highest projection they calculated (formula explained in report) shows the loss of potential jobs at 22 million, and this number doesn’t account for any multiplier factors.  They point to a study by Global Insight which finds that “92% of job growth occurs after a company goes public.”  Accordingly, if the amount of IPOs is decreasing you could expect that potential jobs are being lost.

One additional concern is that this is not a global phenomenon but a US one.  The time period covered for their analysis was 1991-2008 and of all the developed nations who had reliable data no one suffered as much as the US.  In fact, Hong Kong over this span of time achieved a 253.2% growth in listings compared to a -22.2% reduction for the US.

For the complete report and Grant Thornton’s recommended solutions to this problem please turn to the pdf file they have at their website found here.