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Last Updated: Thursday, 27 April 2006, 14:04 GMT 15:04 UK
US fears firms listing overseas
New York Stock Exchange
The NYSE fears firms are deterred by costs and litigation risks
Business organisations, including the New York Stock Exchange, have voiced fears to the US Congress about global companies leaving the US to float.

Those concerned have highlighted that most large company floatation in 2005 occurred outside the US.

NYSE group chairman Marshall Carter said global listings are taking place outside the US to avoid costs, possible litigation, and accounting rules.

The fears come amid growing calls to reduce burdensome financial regulation.

'More natural markets'

Companies are increasingly urging that tougher accounting and governance rules that were imposed following the Enron scandal should be reduced.

Out of 24 of the biggest floatations in 2005, only one was registered in the US, according to accountants Ernst & Young.

"Despite a welcome resurgence in global equity financing, the US is losing the competition for these new listings," said Marshall Carter, chairman of the NYSE group.

Richard Baker, chairman of Congress's Capital Markets Subcommittee and a Republican congressman, expressed similar fears to Mr Carter.

"These domestic issues [of costs, accounting rules and possible litigation], combined with increasingly efficient and liquid foreign markets, pose a significant challenge to the supremacy of US capital markets" said Mr Baker.

Against the backdrop of fears that US companies are listing elsewhere, is a recent trend of foreign companies deciding to delist on the US market.

Companies which have done so include France's Vivendi, Australia's Coles-Meyer and Japan's Pioneer.

The hearings are adding pressure on Congress to revise the so-called Sarbanes-Oxley Act, which imposed tight rules on auditing and corporate board membership from 2002..

But some members of Congress rejected such claims, saying global listings in the last year could be interpreted as much a reflection of foreign markets as of the situation in the US.

"After closer examination, many of last year's largest [flotations] were the result of emerging capital markets, the listing of state-owned enterprises, geographic barriers and increased global competition," Democrat representative Darlene Hooley said during the hearing.

"It is somewhat disingenuous to argue that many of these companies would have listed in the US if only litigation or regulation were lessened" Ms Hooley said.

She added "many simply listed on their more natural markets" but also said "we can do better."

The US is currently negotiating with other major countries in an attempt to agree a global accounting standard that would be accepted by stock markets worldwide.

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