In the 1980s and ’90s it was was the dream of every large multinational company to have its shares listed on the New York Stock Exchange. After all, this is the world’s biggest stock market, and exposure to US investors would ensure a cheap source of capital.
17 German companies went through the rigorous disclosure exercise to list their shares on the NYSE and Nasdaq, but the results for the most part have been very disappointing. Today’s New York Times reports on the efforts of some to abandon Wall Street:
The Germans are disenchanted by the United States as a source of
capital, and offended by what they view as oppressive new regulations
adopted in the aftermath of Enron and other corporate scandals.With
trading volumes in New York that are, in most cases, a small fraction
of their turnover in Europe, the companies are less willing to bear the
legal costs, liability and the bureaucracy of complying with the rules."They
feel they can raise money just as cheaply outside the U.S.," said
Alastair Ross Goobey, the chairman of the International Corporate
Governance Network. "Why would you expose yourself to much greater
regulation, and much more personal risk when you don’t have to?"
Most of the companies generate less than 5% of trading volumein the States. The only exception is SAP, where the US volume exceeds 22%.
The new Sarbanes-Oxley regulations are also painful for German companies, since they require the CEO and CFO to sign off on the companies quarterly financial statements, exposing them to significant personal liability. This goes against the grain of German corporate governance, where responsibility is diffused in the Managing Board (Vorstand). Thus there is little personal accountability.
Unfortunately for companies like Siemens that want to delist, the process is not so easy: they have to prove that they have fewer than 300 investors living in the US – an impossible task for all but the smallest companies.
