Does Resurgent IPO Market Take The Heat Off Of Sarbanes-Oxley?
from the may-i-be-excused? dept
In the recently concluded first quarter, both the NYSE and the NASDAQ saw more IPOs than in
any other quarter since the last bubble. All told, 64 companies, including many that are
far from profitability, raised $12.1 billion during the period. This stands in stark contrast to the stock market a year ago, which saw
relatively few IPOs, despite the fact that there was plenty of activity in terms of startups and young companies. At the time, one of the popular reasons given for the lack of IPOs was the
Sarbanes-Oxley "tax", which was seen as an undue burden on small companies. This view, a popular one
among venture capitalists, was bolstered by the fact that a number of companies, which in the past would have probably listed on the NASDAQ, were
opting to go public in London, where they could escape Sarbanes-Oxley. Also, the rise of private equity and management-led buyouts gave credence to the idea that Sarbanes-Oxley made it not worthwhile to be public. So, then, does the resurgent IPO market discredit the Sarbanes-Oxley complaints at all? Certainly, Sarbanes-Oxley still represents a significant cost for small companies, and there's almost no other explanation for why American companies would list in London rather than their home market. But, seeing as the IPO comeback coincides with
record highs for the stock market, it would appear that economic cycles must be playing a pretty significant factor. This doesn't dismiss the Sarbanes-Oxley explanation, but it does suggest that it's just one of a number of factors, rather than the dominant one.
Reader Comments
Subscribe: RSS
View by: Time | Thread
Two Cents
No wonder why most Consulting and Accounting companys still favor the LLP entity.
You may have already seen this, but have a look http://www.ibdeditorials.com/IBDArticles.aspx?id=261617359733121
[ link to this | view in chronology ]
SOX prevents fake fraudulant valuations
Bullshit. Those operating numbers should already be known within the company. The only difference SOX made is CEO & CFO had to sign on those numbers as true and honest and write 1 document describing how those values were checked as true and honest.
Cost, about $500 1 man day to an honest well run company, about $10 million to a dishonest pumped POS.
If the CEO & CFO won't sign off the accounts as true and honest, and can't write a document describing the financial controls in place in the company then they have no business being listed on any stock market in the world.
"No wonder why most Consulting and Accounting companys still favor the LLP entity."
And investors would rather company accounts were in the 'fact' section of the library, not the 'fiction' section.
Since when has lying in accounts not been fraud?
[ link to this | view in chronology ]
Big business won't tire in their efforts to get rid of it - it's their right to try. What scares me is how the "ordinary" citizen gets taken in by their bull s**t.
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Big Business thieves?
[ link to this | view in chronology ]
Just as a small note...
That's a lot of money, and that could easily make the difference between profitability and breakeven. Never mind all the extra management burden. The CEO of one company told me that payroll used to be done by 1/2 person, now they need 2 full-time people just to meet SOX requirements....
SOX is an interesting attempt to force executives to be honest, largely as a result of Enron and MCI. The way I see it, the market punished both of those companies in a far deeper/harsher fashion than any government regulation ever would. And their executives were successfully prosecuted with the laws in place at the time.
Chris.
[ link to this | view in chronology ]
SOX - extra overhead throughout the company
I agree with SOX in principle but sometimes, if you remove all oxygen to prevent fires, you kill the population too ...
[ link to this | view in chronology ]