Professor Bainbridge...on law, politics, religion, culture & food

Impact of SOX on US Listings

From FEI's Section 404 Blog, which is a very useful resource for all thing Sarbanes-Oxley:

... a new study by Professor Luigi Zingales of the University of Chicago, who happens to be a member of the 'Paulson Committee," has found: "[the] premium for listing on both a U.S. and home-stock market has dropped sharply since 2002," from an average premium of 51% from 1997-2001, down to an avg. 31% between 2002-2005.

Professor Zingales determined the US cross-listing "premium" as the "difference between market value ... and book value ... If a cross-listed company traded at 150% of book value and a similar company from the same country listed only on their home market traded at 120% of book value, the "valuation premium" would be 30 percentage points," said the WSJ.

"We raised the cost of being public in the U.S.... These things have long-term consequences," the WSJ quotes Glenn Hubbard, dean of the Columbia University business school and co-chairman of the 'Paulson Committee," as saying in response to the Zingales study.

The Zingales study should be available here on Thursday, 11/30/2006.