US investment strong despite Sarbanes-Oxley

The average daily value of foreign stocks trading on the New York Stock Exchange is the highest it has been in five years.

This is seen as a sign that U.S. investors are not worried that foreign companies will leave U.S. markets rather than be forced to comply with provisions of the Sarbanes-Oxley Act.

This Act, which only applies to foreign companies with 300 or more U.S. investors, mandates that companies show proof of adequate internal controls to prevent accounting scandals such as that which brought Enron down.

European companies have protested portions of the Act as too costly and have secured a one-year delay in compliance from the Securities and Exchange Commission (U.S. companies began to comply in 2004).

However, so far only a few companies have actually delisted, including four British corporations.

If U.S. investors expected such delistings to increase, the would likely avoid investing in foreign companies because they would have to sell their shares in any companies that do delist.

Story link: US investment strong despite Sarbanes-Oxley