Last week New York Mayor Michael Blumberg and Senator Charles Schumer released a report claiming that the Sarbanes-Oxley Act is chasing away foreign business. The main statistic they cite to support this claim is that the proportion of "global IPOs" initiated on American stock exchanges is only a third of it was in 2001, and that 24 out of the world's 25 largest IPOs in the last year were held overseas. This doesn't sound good, but - as the article at the link below points out - the reasons have little to do with regulation. They do include the following:

1) Most of the world's largest IPOs in the last few years have been "privatizations of state-owned companies in Europe and China, which for political reasons were never likely to happen in the U.S."

2) Executives to prefer to hold IPOs in bull markets - and, frankly, the stock markets overseas have generally been more bullish than those in the U.S.

3) It is cheaper to hold IPOs in overseas markets like London and Hong Kong. The local investment banks charge half of what their counterparts do in the U.S.

4) Globalization has forced foreign stock markets to become more competitive. As a consequence, although many of them also have tough regulations, they have become more "liquid and open" and can compete with U.S. stock markets far more readily than they once could.

The "lessons learned" from this bit of news should be sobering to all U.S. stockbrokers and investment bankers. Just as it has for the programmers of Bangalore or the endodontists of Bucharest, globalization has enabled foreigners to do your jobs a lot more cheaply than you can - and just as well. American stockbrokers and investment bankers have, not just willingly, but eagerly abetted the downsizing and outsourcing of millions of American workers for decades. Maybe it's time for them to be downsized and outsourced, too.

"Over There" from The New Yorker