Finance Seminar（2018-30）

Topic: Explaining the U.S. Stock Market Listing Gap And Valuation Premium

Speaker: William L. Megginson, The University of Oklahoma

Time: Wednesday, 12 December, 10:00-11:30

Location: Room 216, Guanghua Building 2

Abstract:

Doidge, Karolyi, and Stulz (2017) identify a U.S. specific “Listing Gap” and find the U.S. has approximately 5,500 firms less in 2012 than the number predicted by a simple cross-country linear model. We attempt to reconcile these contrasting results by studying the cross-country heterogeneity in the number and valuation of publicly listed firms. Though we document that a sharp decline in the number of domestic listed firms is not a U.S. specific phenomenon, this heterogeneity cannot fully explain the U.S. listing gap, which opened between 1998 and was driven by extraordinarily high M&A activity in the U.S. We extend the Doidge et al. (2017) models by including proxies for the size of the public equity market (Market Capitalization to GDP) and other financial development measures and show that the private equity markets have become an effective substitute for public equity markets, consistent with the Ewens and Ferre-Mensa (2018) findings. However, cross-country heterogeneity in the development of the private equity industry is unable to fully explain the abnormally large reduction in the number of U.S. publicly traded firms. We thus replicate our tests of “abnormal” performance by studying the cross-country level of market capitalization, finding the U.S. market characterized by an “excess capitalization” issue, while other OECD countries suffer from a systematic undercapitalization problem. China's remarkable evolution in economic output and number of listed companies is well explained by our model.

Introduction:

William L. Megginson is Professor and Price Chair in Finance at the University of Oklahoma’s Michael F. Price College of Business. He is also the Saudi Aramco Chair Professor in Finance at King Fahd University of Petroleum and Minerals in Dhahran, Saudi Arabia. From 2002 to 2007, he was a voting member of the Italian Ministry of Economics and Finance’s Global Advisory Committee on Privatization. During spring 2008, he was the Fulbright Tocqueville Distinguished Chair in American Studies and Visiting Professor at the Université-Paris Dauphine. He received the University of Oklahoma’s top research prize, a George Lynn Cross Research Professorship, in April 2010.

Professor Megginson's research interest has focused in recent years on the privatization of state-owned enterprises, sovereign wealth fund investments, energy finance, and investment banking principles and practices. He has published refereed articles in several top academic journals, including the Journal of Economic Literature, the Journal of Finance, the Journal of Financial Economics, the Review of Financial Studies, the Journal of Financial and Quantitative Analysis, and Foreign Policy. His co-authored study documenting significant performance improvements in recently privatized companies received one of two Smith Breeden Distinguished Paper Awards for outstanding research published in the Journal of Finance during 1994. He is author or co-author of nine textbooks.

Professor Megginson’s research has been frequently cited in academic and professional publications. His articles have been downloaded over 48,000 times from the Social Sciences Research Network, and his books and articles have been cited over 12,000 times (according to Google Scholar). His co-authored privatization survey article, published in the Journal of Economic Literature in 2001, is the eighth most widely cited finance article published since 2000, and the most widely cited article published in 2001. He is associate editor for two academic journals, and has served as a privatization consultant for the New York Stock Exchange, the OECD, the IMF, the World Federation of Exchanges, and the World Bank. He has visited 76 countries during his lifetime, and has lived in Spain, Pakistan, Switzerland, the Netherlands, France, and Saudi Arabia, in addition to the United States.

Dr. Megginson has a B.S. degree in chemistry from Mississippi College, an MBA from Louisiana State University, and a Ph.D. in finance from Florida State University. Prior to entering academia in 1986, he worked for five years as a petroleum chemist at the world's largest styrene monomer plant and at the largest independent petroleum refinery in the United States. He has been a Visiting Professor at Duke University, Vanderbilt University, the University of Zurich, the University of Amsterdam, Bocconi University, and Université-Paris Dauphine.

//www.ou.edu/price/finance/faculty/billmegginson