Private Matters

Why do private firms stay private? Empirical evidence on this issue is sparse, as most private firms in the US do not report their financial results. The authors investigate why private status matters by taking advantage of a unique dataset of large, leveraged private firms with SEC filings. Unlike a number of other studies, the authors find that neither the existence of growth opportunities, nor the desire of firm founders to diversify, is a principal determinant of the decision whether or not to retain private status.