alt Hacker NewsSure. SOX reg sec 302 and 404. Section 302 is a 100% dealbreaker for most companies, so I stand by my 'impossible' threshold. My comment was simply shorthand for all the upfront and downstream costs of going public, combined with fewer exit alternatives. Auditor/directors increased/personal liability, litigious shareholders, time and attention of management, etc. And, to your point, the lower cost of capital from growth investors. But that wasn't always the case. Certainly not true during the dot-com bubble (pre-SOX). I'll leave it to the academics to try to and isolate causality.
Replies
Seriously? The "you can't knowingly lie in your financial statements, and you have to make an actual effort when compiling them" section?
If that's a "100% dealbreaker" to you, nobody should ever invest in your company, because you are literally complaining about not being able to defraud them!
Except the data doesn't support the claim.
Sarbanes-Oxley passed in 2002 and the number if IPOs climbed between then, in the wake of the dot-com crash, and the GFC six year later, while the median age didn't change much:
https://site.warrington.ufl.edu/ritter/files/IPOs-Age-of-Com...
If your claim was true you'd either expect a decline in IPOs or the age of those companies going up and neither is true during that period.
Now to be clear I'm not saying changes in regulation had no impact. Rather my claim is that regulations plus monetary policy and other macro effects fundamentally changed the structure of the market itself, thereby deincentivizing going public, rather than somehow acting as a break or barrier to IPOs.