What’s Really Imperiling the Stock Market
In The Quiet Force Imperiling Our Booming Stock Market, a New York Times opinion piece argues that corporate governance rules are constraining the strength of public markets — that tougher oversight is discouraging companies from “going public.”
We see it differently. The real threat to U.S. public markets isn’t too much governance but rather the slow erosion of accountability, transparency, and investor rights — all of which actually depend on strong corporate governance.
It’s true that the number of U.S.-listed public companies has fallen dramatically since the late 1990s. But blaming “burdensome” regulation alone misses the mark. Much of that decline has been driven by mergers and acquisitions, as Wall Street dealmakers used increasingly cheaper debt to consolidate industries and eliminate competitors. That has often boosted monopoly power while cutting jobs through layoffs and offshoring.
At the same time, private capital has become a more appealing path than the traditional IPO (initial public offering). Venture capital, growth equity, and private equity allow founders to raise successive rounds of funding while keeping control and building value. Many founders now routinely sell to larger private firms or private equity funds, or existing publicly traded companies, rather than taking their company public.
So yes, compliance costs and disclosure requirements play a role — but they are not the dominant reason the IPO pipeline has thinned or what imperils the stock market. The bigger story is how today’s policy environment is steadily shifting power away from investors and toward insiders while simultaneously eroding stock market transparency, predictability and price volatility - undermining long term value for shareholders.
Policy Shifts
WHAT’S SHIFTING
President Trump has openly criticized the Federal Reserve (“The Fed”) and signaled a desire to influence its interest-rate decisions. This raises real concerns about the erosion of the Fed’s independence — a key anchor of economic stability. When markets believe interest rates are being manipulated for political purposes rather than set on economic fundamentals, it lessens the predictability that underpins both stock and bond valuations.
WHY IT MATTERS:
Investor confidence depends on the Fed’s credibility. If that credibility is compromised, borrowing costs could rise, volatility could spike, and long-term capital investment could slow. The result would be greater instability across equities, Treasury bonds and other interdependent capital markets — and a broad swath of investors and retirement savers would bear the brunt of the risk.
Transparency
WHAT’S SHIFTING:
Trump has also suggested the SEC should move corporate reporting from quarterly to semiannual, arguing it would reduce burdens on companies. While that may lighten management’s paperwork, it would also create longer information gaps for investors, delaying the detection of emerging problems and giving insiders more room to maneuver. Each earnings release would carry more weight, likely increasing market volatility and the risk premium investors demand.
WHY IT MATTERS:
Quarterly reporting is one of the key mechanisms for holding management accountable and maintaining trust and visibility into U.S. capital markets. Reducing reporting frequency would weaken that accountability, widen information asymmetry, and ultimately risk lower valuations over time as investors price in more uncertainty.
Shareholder Engagement
WHAT’S SHIFTING:
In February 2025, the SEC issued a mid-season rule change via Staff Legal Bulletin 14M, making it easier for companies to block shareholder proposals by narrowing what qualifies as a “significant policy issue.” As a result, far fewer environmental and social-related proposals reached a vote this proxy season. At the same time, new beneficial-ownership reporting rules spooked some large investors, who worried that routine conversations with corporate management teams might trigger burdensome disclosures. Several large investors pulled back their efforts, reducing shareholder-company engagement dialogue even further.
WHY IT MATTERS:
Proxy season reviews from ISS and CII show a meaningful drop in proposals coming to a vote.These changes have tilted power decisively toward corporate insiders. Excluding more proposals means fewer opportunities for investors to raise red flags or demand transparency — just as risks related to climate change, labor practices, and governance failures are becoming more material. Weakening shareholder engagement makes it harder to hold management accountable and leaves investors more exposed to avoidable risks and impaired stock values.
Public markets only work when investors can trust them. Weakening shareholder rights, reducing transparency, and undermining the checks and balances that hold corporations accountable risks turning the market into a rigged game — one that rewards insiders while leaving everyone else holding the bag.
This isn’t just about quarterly earnings or record setting stock prices. It’s about the purpose of corporations and the role they play in society. Markets should reflect real economic performance, not just regulatory rollbacks or insider maneuvering. Restoring strong governance, robust disclosure, and meaningful investor engagement isn’t a nuisance — it’s essential to a healthy economy and to the public’s confidence that markets are fair, accountable, and built to create lasting value while avoiding environmental and social harm.
So if we’re looking for what’s really imperiling the market, we don’t have to look far — it’s not too much governance, but too little.
The quiet force isn’t the problem. It’s the antidote.