Publicly Listed or Privately Held: A Comparison of Investment Behavior

Sammanfattning: We compare investment levels and investment sensitivities of public and private firms along the dimensions of assets, human capital and innovation. For a sample constructed to include a broad universe of Swedish firms, we find that public firms have higher investment levels and investment sensitivities than those that are private, with the differences being statistically and economically significant. For a size and industry matched sample, as well as for a group of transition firms, the differences are less evident but, when present, they are consistent in that public firms' investment levels exceed those of private firms. Based on empirical analysis, we cannot rule out empire-building as an explanation to the differences. Our findings indicate that the differences in investment behavior are economically meaningful and should be considered in the decision to be publicly listed or privately held.