The Anatomy of Large Public and Private Firms in the U.S. and Europe

Abstract

This paper adopts a comparative perspective and investigates the listing status, size, industry, age, and ownership patterns of the ecosystems of large U.S. and European firms as of year 2012. We first document that Europe’s lower stock market development relative to the U.S. has not prevented the creation and growth of large firms (i.e., with more than $2 bn in sales), as they account for the same fraction of GDP as large U.S. firms do. However, these firms significantly differ in a number of characteristics. First, the propensity to be publicly traded is sensibly higher among U.S. firms. Second, U.S. firms are more innovative, consistent with market-based systems being more capable of financing intangible assets than bank-based systems. Third, European firms are on average older and tend to go public at a later stage of their life cycle. Fourth, while dispersed ownership is predominant in the U.S., family control is most prevalent in Europe.