Policy

Bye-Bye, Wall Street

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Wanna little bad news before taking off for your three-day weekend? Chew on this bummer from the Wall Street Journal: "U.S. Falls Behind in Stock Listings."

A combination of mergers, fewer U.S. IPOs, lower listing costs abroad and a shift in how investors and stockbrokers do their jobs has driven down the number of U.S. stock listings by a startling 43% since the peak in 1997—all during a period when the number of listings outside the U.S. has more than doubled.

The result is some 3,800 fewer companies trade on the U.S. exchanges today than in 1997, according to consulting firm Capital Markets Advisory Partners. Abroad, there are nearly eight times as many listings as in the U.S., with Hong Kong, China and India among the leading venues.

"We're losing the ecosystem that has helped buoy the U.S. economy over decades," said Kate Mitchell, co-founder of Scale Venture Partners, a Silicon Valley venture-capital firm.

Swell!

The annual supply of U.S. IPOs since 2000 has averaged just 156, down 71% from the pace in the 1990s, according to Capital Markets Advisory.

Some U.S. start-ups that in the past might have turned to a U.S. exchange when they needed capital now list abroad, where fees are lower and they don't face costs such as complying with the Sarbanes-Oxley corporate-governance law.

What's that you say about George W. Bush's then-ballyhooed, now-forgotten "crackdown on Wall Street"?

When privately held U.S. companies do proceed with IPO plans, some now look abroad. HaloSource Inc., a water-purification company, is based in Seattle but last fall chose to list its shares in London.

Because it doesn't trade in the U.S., HaloSource has a lower cost of regulatory compliance, is less exposed to shareholder suits and pays less for directors' and officers' liability insurance, according to James Thompson, chief financial officer. "The savings are pretty significant," he said.

Small U.S. public companies' costs to comply with securities law rose about $1.7 million, to roughly $2.8 million a year, after Sarbanes-Oxley passed in 2002, according to a 2007 study by law firm Foley & Lardner.

Well, that wasn't totally predictable!

Reason on Sarbanes-Oxley here. And here's a bad video of a good song. Happy Memorial Day!