For the last two weeks at least, we've seen story after story about foreign companies that are listed on U.S. stock exchanges fretting over Sarbanes-Oxley reporting requirements that they now must meet. European companies, it seems, have been the most vocal.
It's such an issue, in fact, that lawyers and regulators added an anti-Sarbox clause to the merger agreement between Euronext and the New York Stock Exchange. The provision will break up the new organization if an attempt is made to apply Sarbox requirements to its European arm. Some firms may even consider going private to avoid the extra burden.
On the other hand, companies in developing countries are willing to do almost anything for the investor/market confidence that comes with a listing on a U.S. exchange. A professor from the University Chicago points out in a recent study that Sarbox compliance benefits foreign companies not only by increasing investor confidence but also by saving them money and increasing their value.
As we see it, foreign companies implementing Sarbox controls face the same dilemma that U.S. companies do. They must ask themselves if the benefits of doing business in the U.S. are worth the costs in time, money and in the overall frustration that box-ticking sometimes causes. The answer will be different for everyone.