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Mallory Factor: It’s Location, Location, Location in the Sarbox Aftermath

Mallory Factor: It’s Location, Location, Location in the Sarbox Aftermath

by Rick Turoczy on August 4, 2006

On July 11, the London Stock Exchange (LSE) affirmed that it drew 50 international initial public offerings (IPOs) from 15 different countries in the first half of 2006. Compare that to the combined 15 international IPOs offered on the Nasdaq and New York Stock Exhange in the similar period.

At the root of this recent and startling shift is the 2002 Sarbanes-Oxley Act. Imposed after the fall of Enron and WorldCom, this law has hamstrung our public companies and forced them to buck their tradition of innovation by becoming too cautious and careful. Though some type of legislation was necessary in the wake the accounting frauds, Congress acted without prudence or prescience. Its overreaching caused long-term negative economic consequences — at an estimated cost of $1 trillion, according to Dr. Ivy Zhang, now of the University of Minnesota — that are even greater than the initial damage.

Mallory Factor: It’s Location, Location, Location in the Sarbox Aftermath

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