The WSJ provides evidence that private placements are large enough to support Justin Wolfers (on the left) and John Cochrane’s (on the right) argument that stock buybacks are not an indication that low corporate taxes are not motivating increased investment. Stock buybacks fund private placements.
“An analysis by The Wall Street Journal found [private capital markets] have more than doubled in size over the past decade, surpassing the growth of public stocks and bonds available to all investors. … At least $2.4 trillion was raised privately in the U.S. last year. That widened a gap that emerged in 2011 with the public markets, which raised $2.1 trillion, according to the Journal’s analysis of tens of thousands of securities filings and data provider Dealogic.
‘[Private placements are] fueling entrepreneurship,’ because ‘companies have lots of options to access capital,’ said Jacqueline Kelley, head of the Americas IPO Markets practice at accounting firm Ernst & Young LLC. … The number of U.S. unicorns tripled over four years, to 105 in February from 31 in 2014, according to a Journal tracker. … The fast-growing market has made it easier for smaller and medium-size companies to get loans.”
