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Jamie Dimon says public companies have a diminishing role in the global financial system

Jamie Dimon crosses his arms in front of the JPMorgan Chase logo.
Michel Euler/Pool via Reuters
Dimon released his annual letter to shareholders.
By Courtney Vinopal
Published Last updated

The number of public companies in the US has shrunk by about 34% since its peak in 1996, suggesting their role in the global financial system is diminishing, JPMorgan CEO Jamie Dimon said today (April 4).

In his annual letter to shareholders, Dimon said the number of US public companies “should have grown substantially over the past decade,” but instead fell. At the same time, private companies are proliferating in the US, a trend that Dimon says is “worthy of serious study.”

“It’s incumbent upon us to figure out why so many companies and so much capital are being moved out of transparent public markets to less transparent private markets,” he added.

Why the number of US public companies is shrinking

At the height of the dot-com boom in 1996 there were 7,300 publicly-listed US companies, Dimon said in his letter, whereas there are only 4,800 today. By contrast, the number of private US companies backed by private equity firms totals 10,100 today — “a remarkable increase” from 1,600 over the same period, the JPMorgan executive said.

Part of this trend can be attributed to the aggressive growth of private markets in recent years, which has made it easier for companies to access capital without going public. Firms can raise money while staying private, which helps explain the growing number of so-called “unicorns,” privately backed companies with a $1 billion-plus valuation.

There are other market factors that may dissuade more companies from going public today, Dimon said. Publicly-traded companies may have less flexibility when it comes to compensation, shoulder higher litigation costs, and face “relentless pressure” when it comes to reporting quarterly earnings. The trend may also be driven by increasing mergers and acquisitions activity, a practice in which JPMorgan itself is a major player.

More privacy means less regulation

While there are good reasons why companies may decide to stay private, fewer public companies also means less transparency and regulation, Dimon said. The JPMorgan CEO said it was a particularly important time to think about the diminishing influence of public sector companies because “more regulation is coming that will affect this trend.” The Securities and Exchange Commission is said to be considering more than 50 proposed rules this spring, including tougher disclosure requirements to force more transparency from private companies.

This isn’t the first time Dimon has sounded the alarm. He expressed similar concern in his 2016 letter to shareholders, and recommended a set of “corporate governance principles” to foster the health of public companies.

“This is a good time to think through and create the outcomes we want,” Dimon says in his 2022 letter, “and not just let multiple, often well-meaning but uncoordinated legal, regulatory, and policy decisions take us where we do not want to go.”

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