Privately Held Companies: Better Run??

An argument in favor of privately held firms, financed by private equity funds, is that the privately held companies are better managed.  See, e.g., Donald J.Gogel, "What's So Great About Private Equity" (todays WSJ at A13).  The argument is, in short, that managers of private firms can focus on the bottom line and are not "responding to the cacophony of their many, multiple constituencies."  The argument is, in essence, an attack on the many new rules -- legal, ethical and best practice rules -- that we expect a board in a publicly traded firm to obey.  If the argument is correct, public investors are better off investing in private equity funds that then invest in privately held companies than they are investing in the same companies as public shareholders.  A more efficient solution would be to let publicly traded firms set their own management rules (have fewer mandatory rules) and let public investors select among the management systems in which they have the most confidence.