Monthly Archives: September 2025

A familiar concern among policymakers is the shrinking number of U.S. publicly traded companies. For instance, SEC Commissioner Hester Peirce recently highlighted that the number of listed firms has fallen from approximately 8,000 in 1996 to around 4,200 in mid-2022. Increasing the supply of public companies has been a bipartisan policy objective.

Yet this debate often overlooks thousands of firms traded outside national exchanges on the over-the-counter (OTC) market. While not “listed” in the traditional sense, many of these firms’ securities are publicly traded via broker-dealers and interdealer quotation systems (IDQS). OTC Markets Group, for example, enables retail investors to buy and sell the stock of nearly 5,000 U.S. issuers. By a functional definition of “publicly traded,” the U.S. market may be considerably larger than the standard narrative suggests.

A critical distinction, however, lies in disclosure. Exchange-traded firms must comply with Section 13 of the Exchange Act, which ties eligibility for exchange trading to mandatory, periodic disclosures. In contrast, many OTC issuers historically provided no ongoing public financial information while continuing to benefit from broker-dealer quotations. This separation of public trading and ongoing disclosure is unusual in U.S. securities markets, where the two are typically bundled.

In a new paper titled When Disclosure Pays: Evidence from the Over-The-Counter Markets, we study a recent regulatory reform—amendments to SEC Rule 15c2-11— that, for the first time, directly tied periodic disclosure and public trading in the OTC market. This reform ended the longstanding anomaly in which firms’ could be publicly quoted without making periodic public disclosures. In so doing, we provide new estimates of the costs and benefits, in terms of liquidity and valuation, of a mandatory disclosure regime that bundles together disclosure and public trading. READ MORE »