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One of my good friends was an investment banker who specialized in IPO's from 2000 to 2011. When ever I asked him about Sarbanes-Oxley chilling IPO's he would

One of my good friends was an investment banker who specialized in IPO's from 2000 to 2011. When ever I asked him about Sarbanes-Oxley chilling IPO's he would always say that the only people who claim the legislation slowed down IPO's were people on chat boards who had no relation to the process at all. From an auditors perspective it might raise some complications but from a companies perspective, it just codified rules that almost all public companies were already doing. I mean, even on hacker news, you'll find people parroting the sentiment that Sar-box slowed down IPO's but they never really seem to be able to identify just why, or what specific rule it is that is keeping companies private. n Its always some non specific thing they point to, like more regulation or liability of C level executives. I mean the retort is probably what percentage of public companies have been brought private strictly because of this rule or how many executives have been sent to jail under this rule. The below article is from 2012 but it lays out my point pretty well I think: http://blogs.reuters.com/alison-frankel/2012/07/27/sarbanes-oxleys-lost-promise-why-ceos-havent-been-prosecuted/ http://blogs.reuters.com/alison-frankel/2012/07/27/sarbanes-...

logicallee 9y ago
Reminds me of my good lawyer friend who says high legal fees don't impact startups at all. /s Here in the real world Sarbanes-Oxley has a huge burden on actual auditors and accountants at public companies. It's not some afterthought, the burden on companies is huge. You can hardly talk with a controller/auditor without hearing about it. Why would anyone make that up? It's just a record keeping and reporting burden, it's just a nuisance. Nobody gets anything out of exaggerating that nuisance.
- koolba 9y ago
  And it has a huge impact on the bottom line of consultancies and external auditors. SOX, and more recently Dodd-Frank, has been a cash cow for those groups.
arcanus 9y ago
I'm not sure I agree. I think that this has consolidated the IPO market to only a few major banks that are capable of acting as underwriters. Empirically, the number of IPOs in the USA has dropped, and the size has increased. So the data is consistent with there being a larger regulatory burden on businesses going public.
- chollida1 9y ago
  > Empirically, the number of IPOs in the USA has dropped, and the size has increased. So the data is consistent with there being a larger regulatory burden on businesses going public I'll agree with the first sentence. However it is not anywhere near enough to imply the second sentence. And lots of smart people agree... https://www.bloomberg.com/view/articles/2015-06-24/where-have-all-the-publicly-traded-companies-gone- https://www.bloomberg.com/view/articles/2015-06-24/where-hav... > The study also looked into the old argument that "regulatory and legal changes in the early 2000s, including Regulation Fair Disclosure ('Reg FD') and the Sarbanes-Oxley Act ('SOX'), made it more expensive" to list. These played little or no role because the decrease in new listings was "well on its way before these changes took place." At worst, the regulatory burden accounts for only a small portion of the decline.
- Dwolb 9y ago
  >Empirically, the number of IPOs in the USA has dropped, and the size has increased. The empirical evidence could also be explained by other factors such as increases in availability of venture funding.
rb808 9y ago
So if you think it just "codified rules that almost all public companies were already doing." and there have been surprisingly few convictions using the law - then we might as well remove it then. (I do believe that SOX is an unnecessary burden)

logicallee 9y ago

Reminds me of my good lawyer friend who says high legal fees don't impact startups at all. /s Here in the real world Sarbanes-Oxley has a huge burden on actual auditors and accountants at public companies. It's not some afterthought, the burden on companies is huge. You can hardly talk with a controller/auditor without hearing about it. Why would anyone make that up? It's just a record keeping and reporting burden, it's just a nuisance. Nobody gets anything out of exaggerating that nuisance.

koolba 9y ago
And it has a huge impact on the bottom line of consultancies and external auditors. SOX, and more recently Dodd-Frank, has been a cash cow for those groups.

arcanus 9y ago

I'm not sure I agree. I think that this has consolidated the IPO market to only a few major banks that are capable of acting as underwriters. Empirically, the number of IPOs in the USA has dropped, and the size has increased. So the data is consistent with there being a larger regulatory burden on businesses going public.

chollida1 9y ago
> Empirically, the number of IPOs in the USA has dropped, and the size has increased. So the data is consistent with there being a larger regulatory burden on businesses going public I'll agree with the first sentence. However it is not anywhere near enough to imply the second sentence. And lots of smart people agree... https://www.bloomberg.com/view/articles/2015-06-24/where-have-all-the-publicly-traded-companies-gone- https://www.bloomberg.com/view/articles/2015-06-24/where-hav... > The study also looked into the old argument that "regulatory and legal changes in the early 2000s, including Regulation Fair Disclosure ('Reg FD') and the Sarbanes-Oxley Act ('SOX'), made it more expensive" to list. These played little or no role because the decrease in new listings was "well on its way before these changes took place." At worst, the regulatory burden accounts for only a small portion of the decline.
Dwolb 9y ago
>Empirically, the number of IPOs in the USA has dropped, and the size has increased. The empirical evidence could also be explained by other factors such as increases in availability of venture funding.

rb808 9y ago

So if you think it just "codified rules that almost all public companies were already doing." and there have been surprisingly few convictions using the law - then we might as well remove it then. (I do believe that SOX is an unnecessary burden)