Largest Non-Public Companies
| Peter Klein |
Last week’s Financial Times offers a list of the largest companies you know little about. The Non-Public 150 includes the world’s largest state-owned enterprises, private equity companies, partnerships, mutuals, cooperatives, and other non-publicly traded entities. State-owned energy and utility companies (Aramco, Pemex, Petróleos de Venezuela, etc.) top the list but private firms such as Sparkassen-Finanzgruppe (banking), the Nippon Life Insurance Company, and buyout specialist Kohlberg Kravis Roberts Co. are up there as well. (Thanks to the PSD Blog for the pointer.)
Leaving aside the SOEs, why do these firms choose to avoid the public markets? Many people have the impression that only small, local firms are established as cooperatives or mutuals, but the FT 150 list includes some of the world’s largest financial institutions. Organizational scholars have paid relatively little attention to coops and mutuals (Henry Hansmann being the most obvious exception). Private equity has well-known advantages (nicely summarized in Michael Jensen’s “Eclipse of the Public Corporation”) but there is relatively little empirical work on the choice between private and public equity. More work on family firms is needed as well.
Here is the Times’s analysis (framed as a fresh look at Jensen’s “eclipse” hypothesis).