Certainly. But it still actually happens under existing law to existing public companies, and happens less to companies that aren't public corporations (C corps.) and correspondingly don't have the same tax treatment. And having companies owned by smaller numbers of people also addresses the issue of ownership being so diluted that nobody has sufficient incentive to pay attention to corporate governance.

> Yes, but those problems can't be fixed by making the market less free.

The "[some regulation] vs. lack thereof" debate is uninteresting in the abstract. Most regulations make things worse as a general rule, but if we don't evaluate them each individually then we wouldn't even have laws against theft or murder etc.