August 16, 2016
They are known as “unicorns” — companies valued at $1 billion or more, but which remain in private hands — and their names read like a veritable Who’s Who of Silicon Valley: Airbnb; Dropbox; Pinterest; Snapchat; Uber. According to recent industry data, there are close to 100 unicorns in the U.S. alone and another 71 worldwide. On one hand, it’s easy to understand why these companies choose to stay private. The additional costs, regulatory requirements, and administrative hassles of listing on the stock market are immense. What’s less understandable, though, is why U.S. policymakers are quiet about this. Most countries require privately held companies above a certain size threshold to publicly disclose their audited accounts, but the U.S. has no such rule. That’s good for the unicorns, but is potentially bad for the rest of us. At a time when the cumulative valuation of unicorns around the world is close to $600 billion, most governments recognize that information regarding the financial underpinning of these companies has societal and economic value. Employees, customers, suppliers, investors, and other stakeholders are deeply affected by what these companies do and how they do it. But because these companies are not required to disclose their financial information, many stakeholders are kept in the dark….