Question

ince implementation of Sarbanes-Oxley, the number of IPOs in the US has decreased dramatically. What are the pro's and con's of this consequence?

Answer 1

Pro's

1) Reduction in Frauds : For IPO, they need to Comply Sarbance Oxley Act which leads to high cost and effective controls .Only Genuine and big Companies can think to comply this which leads to reduction in frauds after implementation of this.

2)Opportunities to Venture Capitalist, Banks : As high cost attached with IPO after implementation of Sarbanes Oxley Act, Now Companies are raising monies from Venture Capitalist and Bankers.

Con's :

1) Increase in Inflation : As companies are moving to Venture Capitalist/ Banks to raise money at higher cost which leads to inflation.

2) Reduction in Economic Growth : As small Companies has closed their business as they are not able to raise money through IPO at Low cost.