The figures speak for themselves, out of the 25 largest foreign companies to list outside their home country in 2006, only six of them chose American exchanges, compare to 22 in 2000, whileLondonand Hong Kong surpassed New Yorkas the international IPO capitals of the world.
In 2003, the first year after Sarbanes-Oxley was passed into law, the New York Stock Exchange and Nasdaq, the leading American exchanges, won new listings worth about $50 billion, while the LSE and its AIM junior market, and theHong Kongexchanges secured about $25 billion each. In 2006,New York’s markets have won only about $30 billion of listings, whileLondonandHong Konghave amassed close to $90 billion between them. (Timesonline 2006)
Meanwhile, the financial burden is especially heavy for smaller companies, the regulatory costs around 2% of revenue at firms with revenue under $100 million. But firms with less than $100 million revenue make up half of NASDAQ’s 3000 listings. Comparing to the hefty price of around $2 million to list in the US, UK’s Alternative Investment Market (AIM) only costs around $600,000 for listing of smaller companies, the cost advantage of UK’s capital markets seem obvious and proved to be enough to allure IPOs to London (Brown and Erika 2006)
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