The shrinking number of public corporations in the US

In his famous Harvard Business Review article titled “Eclipse of the public corporation,” Jensen (1989) argues that public corporations are inefficient organizational forms because private firms can resolve agency conflicts between investors and managers better than public firms. His prediction initially appeared invalid. As shown in Figure 1, the number of public firms increased sharply in the first half of the 1990s. However, the number of listed firms peaked in 1997 and has since fallen by half, such that there are fewer public corporations today than 40 years ago (Doidge, Karolyi, and Stulz, 2017). Does this fall vindicate Jensen’s (1989) argument? Is the public corporation in trouble?