Bill Sjostrom refers to a NYT article that quotes hedge fund manager is quoted as suggesting that buyout funds are appropriating profits that should go to public shareholders. Sjostrom says that can’t be in the longrun because of competition in the buyout market.
I’m sympathetic with that view, but I think there’s a bigger question. Whoever is getting the profits from the switch to private ownership, it’s clear that there are such profits – that is, the costs of being public increasingly outweigh the benefits, even for big firms.
The NYT article cites SOX, but it also mentions other problems. It quotes one executive as saying, "Do I want a board of people who are owners that want to make the business better, or a group that acts like scared regulators? I'd much rather have a strong businessperson on my board than a Harvard professor who is an expert in corporate governance who only wants to talk about process.
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