International Seminar Discusses Reasons for Fewer US Listings

In addition to the usual reasons given for the decline in US equity listings, such as the Sarbanes-Oxley mandates, a panel discussion at the International Bar Conference ongoing in Chiacgo cited other factors that are contributing to the intense listing competition and a senior SEC official applauded the emergence of an overseas equity culture. For example, Philip Boeckman, of Cravath, Swaine & Moore’s London office, noted the rise of deeper and more liquid markets outside the US, which means that a US listing is no longer needed for a successful distribution. Another factor cited by the panel is that US investors are willing and able to invest overseas, while still another is that US research analysts are now based in overseas locations. An important factor mentioned was that there are generally lower underwriting fees outside the US.

Another reason for the decline in US listings is the availability of sufficient alternatives that offer good access to emerging market investors. In this context, panelists mentioned the alternative investment market (AIM) of the London Stock Exchange, which is an international market for smaller growing companies with a pragmatic approach to regulation.

Paul Dudek, Chief of the SEC’s Office of International Corporate Finance, noted that the level of offshore equity markets and the spread of the equity culture is a good thing. Eventually, it will mean increased disclosure and sound corporate governance since investors will tolerate neither inadequate disclosure nor poor governance. According to the SEC official, any global forum shopping will not result in a regulatory race to the bottom. If anything, he believes that the worst case scenario is a race to the middle.