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Forbes.com: Company Delistings Nearly Triple in 2003

Forbes.com: Company Delistings Nearly Triple in 2003

by Rick Turoczy on December 13, 2004

“We basically find that going dark can serve as a way to conserve cash but it may also be exploited by insiders trying to avoid the scrutiny of the market,” Wharton accounting professor Christian Leuz said in the newsletter. “Whether insiders succeed, and whether the decision to go dark is a good or bad one, therefore depends on the governance in place.”

To discourage companies from delisting, Leuz suggested Sarbanes-Oxley should be modified to reduce the costs of compliance for smaller firms. These firms, however, would have to disclose they’re playing by different rules than larger companies.

Some investors have petitioned the SEC to close a loophole that allows companies to claim fewer than the minimum number of shareholders of record, when the actual number of shareholders exceeds the minimum. The investors have argued that companies are exploiting this loophole in order to go dark.

Forbes.com: Company Delistings Nearly Triple in 2003

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