A couple of months ago I asked, “what happened to IPOs.” Today’s WSJ asks almost the exact same question and gets the same answer:
The elephant in the room is the 2002 Sarbanes-Oxley law, which triggered billions of dollars in new compliance costs for public companies.
* * * The question for companies now, as ever, is whether the benefits of going public are worth the costs. It’s indisputable that America has raised those costs in recent years. In addition to Sarbox’s Section 404, Congress has made it easier for big labor to get proxy access, increased the opportunities for lawsuits, too often turned reporting mistakes into major fines or potential felonies, and meddled into corporate pay decisions. None of these make going public more attractive.
With America still suffering close to 9% unemployment, it’s time for both parties to bring the cost/benefit calculus for IPOs back into balance.
