Why Have More Than 3,200 U.S. Companies Chosen to go public on the Frankfurt Stock Exchange?
NEW YORK, December 22, 2010 – Two separate studies, one conducted by a group of executives and academics, and another by McKinsey and Co. for New York Mayor Michael Bloomberg and New York Senator Charles Schumer, both reached the same conclusion; excessive regulation has made the U.S. stock exchanges a less-than-favorable place to go public, and singles out the Sarbanes-Oxley Act, as the main reason.
So what is the Sarbanes-Oxley Act, and why is it making such a negative impact on U.S. public companies? Sarbanes-Oxley was enacted in 2002 in response to the failures of several large companies like Enron and WorldCom. It’s intent was to protect investors. Basically, the act requires full disclosure on just about everything and most believe that the requirements went way overboard. It comes down to expense. To adhere to the requirements of Sarbanes-Oxley is extremely costly. So costly, that, since passage of the Sarbanes-Oxley Act, many U.S. companies have chosen to list their stocks on the Frankfurt Stock Exchange.
The Frankfurt Stock Exchange is the world’s third largest trading exchange, ranking only behind the New York Stock Exchange (NYSE) and NASDAQ. The Frankfurt Stock Exchange is home to public companies from more than 80 different countries with companies from North American making up almost 40% of the total companies listed, including more than 3,200 from the United States alone. Here are some more reasons why:
• Unlike in the U.S., all shares are free trading - no restricted shares, even for officers and insiders.
• No short sellers - naked short selling was banned completely in Germany in June 2010.
• The Frankfurt has much greater liquidity/trading volume than the OTCBB and Pink Sheets. As of the end of 2010, more than 65% of the total trades were from countries outside Germany, with more than 22% from US investors.
• A listing on the Frankfurt Stock Exchange is much faster than the OTCBB or Pink Sheets (only 5 to 6 weeks from scratch).
• The Frankfurt Stock Exchange is much more respected than the OTCBB and Pink Sheets.
• The Frankfurt Stock Exchange boasts much greater exposure to investor capital than the OTCBB and Pink Sheets. In fact, investors directly connected to the Frankfurt Stock Exchange represent a full 35% of the world’s investment capital.
Combine that with the fastest rate of growth, the highest earning per capita in the EU, and the euro’s strength in comparison to the dollar, and you can see why so many companies today are choosing to list on the Frankfurt Stock Exchange.
For more information about going public on the Frankfurt Stock Exchange, please visit www.gopubliceu.com
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