How to Invest in Private Companies That Are Off Limits to You

According to Canadian Business “A study out of the Stern School of Business and Harvard University found that private firms grow faster than public ones. The average investment rate among private companies is nearly twice as high as public firms—6.8% compared to 3.7% of total assets per year.”

Canadian Business went on to report that the Stern research found “There are three reasons why private businesses grow faster, the authors write. First, public companies have an “agency problem,” the inherent conflict of interest between executives wanting to create wealth for themselves and doing what’s best for shareholders… The second issue is what the academics call the “quiet life”; managers of public companies sometimes avoid making investment decisions because they don’t want to rock the boat. The third concern is “short-termism” or the focus on short-term profits.”

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