AMERICAN IPOs – THE COMEBACK NEVER CAME
- JANUARY 4, 2012
America as Number Two
Hong Kong again beat the NYSE in new stock offerings in 2011.
- One reason the U.S. economy isn’t creating enough jobs is that it’s not creating enough employers. After another dismal year in 2010 for American initial public offerings (IPOs), some had predicted a strong 2011. But now the results are in and as the Journal reported last week, “the comeback never came.” Fewer companies went public in 2011, and the offerings raised less money.
For the third year in a row the world’s leading exchange for new stock offerings was located not in New York, but in Hong Kong. And even without counting Hong Kong’s $31 billion in deals, the various exchanges on the Chinese mainland slightly exceeded the $41 billion combined total of Nasdaq and the New York Stock Exchange, according to Dealogic.
Given that the U.S. is still home to the world’s largest economy, there’s no reason it shouldn’t have the most vibrant equity markets—unless regulation is holding back the creation of new public companies. On that score it’s getting harder for backers of the Sarbanes-Oxley accounting law to explain away each disappointing year since its 2002 enactment as some kind of temporary or unrelated setback.
And don’t try blaming all the problems in U.S. equity markets on the European crisis. The London Stock Exchange Group said on Wednesday that proceeds from 2011 initial public offerings in London rose 27% from 2010, and that 2012 “promises to be another exciting year.”
There will certainly be excitement in 2012 for Facebook’s expected IPO, but for many innovative U.S. companies the regulatory burden of being a public company is simply too great. Every Presidential candidate should do as Newt Gingrich did in these pages Thursday and make the case that America’s markets should be the most hospitable in the world for companies raising equity capital. Mr. Gingrich called for full repeal of Sarbox, which would be a good start.
