JP Morgan boss Jamie Dimon highlighted the burdens of being a public company at the Institute for International Finance on Friday, saying that he’d take the giant bank private “if I could”. Morgan Stanley’s James Gorman, meanwhile, said that being a public company was a “burden”.
“Being a public company has real negative downsides,” said Dimon, highlighting the risk of litigation, excess bureaucracy, and public scrutiny of specialised compensation packages.
The US equity market is shrinking in absolute terms, contracting by around 2% last year, according to statistics from Citi. Stock buybacks and leveraged buy-outs remove equity value from the public markets, while some companies are choosing not to go public at all.
Securities law is increasingly used in the US to challenge companies for wrongdoing that, at first glance, has little to do with markets — the State of New York’s suit against Exxon Mobil over climate change, for example, is framed as a failure of shareholder disclosure.
“It shouldn’t be that way,” said Dimon. “It takes away the ability of the public to invest, and should be looked at very seriously as a matter of public policy, because these alternative sources of capital are going to be around for a long time.”
In practice, taking JP Morgan private would be impossibly large — the bank’s market capitalisation is $385bn, making it more than eight times larger than the largest LBO in history.
The US hosts many of the world’s “unicorns” — startups valued at more than $1bn — though several of them went public this year, with Uber, Lyft and Peloton all listing in New York. However, the failure of WeWork’s listing may encourage others to delay going public.
Gorman described being a public company as a “burden”, agreeing with Dimon, saying “the funny thing about quarters, is they come around with an alarming frequency… why wouldn’t we just report revenues every three months and do full report every six months?”
He said that Morgan Stanley’s shareholder meetings had more security and maintenance people than attendees, as most shareholders are institutional and vote remotely.
“Ours are in Westchester if anyone wants to come,” said Gorman. “I get so lonely up there. There are certain things that are anachronisms from the way business was done 50 years ago.”