Wednesday, November 11, 2009

Where Did All the IPO's Go?: "Fixing Public Markets’ “Systemic Dysfunction”"

From the Wall Street Journal's Venture Capital Dispatch blog:

A new study, A Wake-Up Call for America, by accounting firm Grant Thornton LLP documents an alarming decline in publicly traded U.S. companies – 22% since 1991 – and has some thoughts on what to do about it.

In the five years before the Internet bubble, there were 520 initial public offerings per year versus 122 per year post-bubble, evidence of a “serious and systemic dysfunction” in the U.S. stock market, said David Weild, a Grant Thornton capital adviser and co-author of the report. At the current rate, the number of U.S. publicly traded companies will continue to decline, much less grow. Although Sarbanes-Oxley rules are the main scapegoat, the decline began with the advent of online brokerages in 1996 and the subsequent imposition of new order-handling rules by the Securities and Exchange Commission, Weild said.

As a result the U.S. lags other global markets and this failure might have cost the nation as many as 22 million jobs over the last decade, the study says. Weild, in an online seminar coinciding with the report’s release, went so far as the call the situation a “national emergency.”>>>MORE