The number of public companies going private has increased since the Sarbanes-Oxley Act was enacted on July 30, 2002, according to a recent press release published by accounting and business advisory firm Grant Thornton. From August 2002 to November 2003, 30% more companies went private as compared to the 16-month period preceding the initiation of the Act.
Why are so many going private? Most notably, the Act has placed very strong responsibility, and liability, on CEOs of public corporations. Going private reduces a company's risk to shareholder litigation and affords the once public company a new sense of control and confidentiality, which are appealing benefits, according to Grant Thornton CEO Edward Nusbaum.
In Five Ideas to Watch from the Nov. 2003 issue of Inc., writers Bobbie Gossage and Patrick Sauer noted a survey in which 80% of the 209 public-company CEOs surveyed wished they were running private companies. Their main reasons: Sarbanes Oxley paperwork and related exhorbitant accounting costs.
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