Why Firms Have Less Incentive Now to Stay on Exchanges

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

We interview Jonathan Macey, who is Yale University's Sam Harris Professor of Corporate Law, Corporate Finance and Securities Law. Jonathan has authored several books on corporations and the law, and joins The Motley Fool to talk about his most recent work, The Death of Corporate Reputation.

A full transcript follows the video.

The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock it is in the brand-new free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.

Brendan Byrnes: You write in the book that a lot of firms have less incentive, now, to stay on exchanges. Why is that?

Jonathan Macey: It used to be -- one has to go back in history to even remember this -- it used to be that a primary motivation for listing on an exchange was that you got a reputational boost, if you're a company.

A company, say in Japan or the U.S., that listed on the Tokyo Stock Exchange or the New York Stock Exchange, this put that company on the map. People said, "Wow, this is a serious company," because they're a New York Stock Exchange-listed company. It was part of their marketing, and it really meant that a company had made it as a manufacturing entity, or a services entity, whatever the underlying business model happened to be.

Now it's just one of many, many trading venues. There's no reputational benefit to being on the New York Stock Exchange. That's just yet another reputational intermediary, like the credit rating agencies, that just don't serve that function anymore.

They're still around. They have a business function, which of course is to provide liquidity, but the reputational component of their business is just non-existent.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2495786, ~/Articles/ArticleHandler.aspx, 9/29/2016 10:06:20 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,336.61 -2.63 -0.01%
S&P 500 2,168.99 -2.38 -0.11%
NASD 5,310.23 -8.32 -0.16%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/31/1969 7:00 PM
NYX.DL $0.00 Down +0.00 +0.00%
NYSE Euronext CAPS Rating: *****