European

China and Sarbanes-Oxley

Tue, 14 Aug 2007 06:59:59 -0400

We've noted before that there seems to be cultural differences when it comes to Sarbanes-Oxley. Europeans tended to have more negative views, while Asian companies tended to be more positive. That seems to be playing out in the exchange listing business. Eleven Chinese companies have listed on Nasdaq this year, more than in all of 2006. The country could soon become the largest foreign source of listings, overtaking the current leaders, Israel and Canada. Meanwhile, more European companies continue to list. It may be that Chinese companies are still searching for a certain legitimacy that a U.S. listing offers. For them, the costs of Sarbox are worth the added visibility. Now, if the liquidity they expect doesn't materialize, they could change their minds in a few years.

For more:
- here's an AP update

Get ready for a common Europe-U.S. standard

Mon, 07 May 2007 20:01:39 -0400

A common European-U.S. accounting standard by 2009? That's the goal of the SEC, and chairman Chris Cox says it is feasible. We'll likely see a lot hand-wringing between now and then, especially on the other side of the pond. European companies have been rather paranoid about the emergence of Sarbanes-Oxley-like rules for a year now and this will only stoke their concerns, despite Europe-based moves to toughen standards. The SEC is already taking pains to note that it is sensitive to their concerns and has modified Sarbox in ways favorable to foreign companies. Note the recent delisting changes. SEC is also willing to give foreign companies a choice of the IFRS international standards or the U.S. GAAP standard. Pretty soon, it will decide whether to give the same choice to U.S. companies.

For more:
- here's a MarketWatch article

Sarbox reform: Goodbye to 'Roach Motel'

Mon, 26 Mar 2007 20:01:39 -0400

There's been a lot of hand-wringing over the competitiveness of U.S. markets lately. The conventional wisdom is that Sarbanes-Oxley has made the U.S. a much less attractive place for foreign companies to list. Some of this has been overblown. But there has long been some frustrating rules that made it hard for foreign companies to delist. Some likened the U.S. markets to the Hotel California-"you can never leave." Others have called it a Roach Motel. The new rule allows a company to delist if it can show that average trading volume has been below 5 percent of global volume over the previous 12 months. The SEC estimates that about 30 percent of the 1,200 foreign companies qualify. The rule will take effect before Sarbox's June deadline. One commissioner says about 60 percent of European companies could leave. This might be seen as a change that will only reduce the number of foreign listees. But the thought is that--long-term--it will make the U.S. more hospitable. As for small companies, they are still waiting on relief.

For more:
- here's a Financial Times update
- European officials applauded. Article
- German companies to delist? Article

Euronext CEO insists Sarbox will "never" apply

Mon, 04 Sep 2006 20:01:39 -0400

Euronext's planned merger with the New York Stock Exchange has hit a few speed bumps, one of which is lingering concerns over Sarbanes Oxley. Euronext CEO Jean-Francois Theodore has insisted several times that the law will "never" apply to European issuers. As an added layer of assurance to nervous customers, Euronext says it will set up a Dutch foundation with an independent board that will decide on any regulatory changes. While I would never say never, it does seem unlikely that Sarbox would apply. Certainly, the NYSE would resist such a move. One reason all exchanges are diversifying geographically is to move into areas where the law is not a hindrance to underwriting activity.

For more on Euronext:
- Here's an update from AFX via Forbes
- One survey has found that European companies are reporting faster, catching up to U.S. companies. Article
- Euronext's profits soar. Article