Free Pricing | JCPenney Coupons | Pizza Hut Coupons | Home Depot Coupons
Flight of IPOs from U.S. points to challenges ahead for securities regulation

Flight of IPOs from U.S. points to challenges ahead for securities regulation

by Rick Turoczy on September 5, 2006

During 2005, 24 of the 25 largest initial public offerings were listed on exchanges outside of the United States. Those who oppose the Sarbanes-Oxley Act (particularly its infamous Section 404) are pointing to this movement as market-based proof that the law has been counterproductive, driving new issues that might have been listed (if only partially) in the U.S. to other exchanges. Ventana Research thinks they have a point, but over time, it will prove to be a minor one.

For one thing, the shift was inevitable. The United States’ dominance of the equity capital markets is likely to erode over the next decade simply because the increasing pools of savings in other countries will drive the growth of those markets. Many of the largest IPOs of 2005 were once nationalized companies, so their listing in local exchanges made sense. This will become the case for smaller companies as well. An Indian grocery chain or a regional Chinese trucking firm, for example, will be served best by a local listing. For smaller countries, electronic trading has enabled regionalization, eliminating fragmented national exchanges that were not very competitive with the New York Stock Exchange and NASDAQ.

Flight of IPOs from U.S. points to challenges ahead for securities regulation

Leave a Comment

Previous post:

Next post: