William J. Holstein is the editor of Chief Executive magazine and, in this NY Times piece, interviews Donald J. Gogel, the chief executive of Clayton, Dubilier & Rice, one of the oldest private-equity firms in the world. The entire interview is interesting, but particularly insightful are the following observations that Mr. Gogel makes regarding the disincentives of investing in public companies:

Q. This suggests that a lot is happening away from public scrutiny because these companies do not have to worry about regulatory compliance.
A. The public glare has a number of difficult or challenging aspects. One is the focus on quarterly earnings. It’s hard for many publicly traded companies to make strategic investments that have long-term paybacks. It’s hard to penalize what may be two or three quarterly earnings reports. The markets won’t tolerate that. There is also the fact that compliance can be distracting.
Q. Are you saying a private-equity firm can do a better job cleaning up an underperforming asset than a public company can?
A. The private-equity teams that come in, when they’re successful, can create a new culture and introduce new leaders. They can create a sense that this is a new team and a fresh start. There’s a definite cultural transformation. Incentives and executive compensation can change. We can recruit people because the compensation systems can be skewed toward long-term results. We can attract people because they don’t want to be in public companies.
Q. Why don’t they want to be in public companies?
A. I think the Sarbanes-Oxley Act and other requirements of the public arena inevitably have a cost. I wouldn’t overstate the cost. It’s one of several factors. But we are able to recruit some C.E.O.’s and other executives to run our companies because they say to themselves, “Boy, if I could do this in private, it would be a lot better. My own performance would be better and the company would be better.”
Q. But, again, from a public policy point of view, how can we know that privately held companies are being governed well?
A. Our investors know as much, if not more, about our investments and returns than do public companies’ investors. We have a more limited audience, so it’s easier to communicate with them. A firm like ours might have 75 or 80 investors. That’s a target audience that’s easier to communicate with.
There’s a lot of continuity because many investors have been with us for a long time. But a public company’s shareholding base could change literally in the fraction of a second. We have the advantage.

From purely my anecdotal experience, virtually all business executives who I know would much rather work for a company funded with private, rather than public, equity.