Companies, Italia study dispels myth that listed companies are short-sighted: 'reforms should favour IPOs'

A study that dispels the myths about finance: listed companies invest more and are better able to seize growth opportunities than their unlisted competitors, while reforms should favour Ipo, the initial public offering, which is the instrument through which a company gets its securities released to the public.

This was discovered in the latest research published in the Journal of Business Finance & Accounting and bearing the signatures of Olga Bogachek and Massimiliano Bonacchi of the Free University of Bozen/Bolzano together with Paul Zarowin of the NYU Stern School of Business.

'The stock market makes you short-sighted' is the story told by managers, regulators and commentators for years. The picture is always the same: as soon as a company goes public, it starts chasing quarterly results and stops thinking about the future. And that is how 'short-termism' has even influenced the way many entrepreneurs look at the stock market.

The problem is not the stock exchange, but data, and the researchers call into question Sageworks, an American database. Since information on unlisted American companies is not public by law, those who want to get their hands on it have to rely on voluntary collections. And so, according to the academics, the sample is represented by the most robust companies, which, as the study indicates, does not represent reality.

In Europe, things work differently: financial reporting is also mandatory by law for medium-sized and large unlisted companies. This means that European researchers can work on a truly representative sample of all unlisted companies - not just the best-performing ones.