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FEBRUARY 16, 2004
A Listing On Wall Street? Non, Merci When French software group Dassault Systèmes (DASTY ) had its initial share offering back in 1996, CEO Bernard Charlès did what any head of a big European high-tech company would do: He made sure shares were listed not only in Europe but on NASDAQ. "Back then, it was the right thing to do," he says. "If you're a global company with global customers, there are advantages to being on the NASDAQ." Charlès says he might make the same choice today, but he would hesitate longer. Because the regulatory environment in the U.S. is seen as increasingly onerous, many big European and Asian companies no longer crave a listing there. Indeed, the roster of corporations that shun American bourses is growing. In the past two years, companies as diverse as Germany's Porsche and Japan's Daiwa Securities and Fuji Photo Film (FUJIY ) have nixed or delayed plans to list on the New York Stock Exchange. European Aeronautic Defense & Space Co. (EADS) -- owner of Airbus -- had drawn up plans to list in the U.S. but has recently shelved them, according to sources close to the company. French luxury-goods giant LVMH Moët Hennessy Louis Vuitton quietly delisted its NASDAQ-traded shares in late 2002. "This is becoming a real problem," admits Robert Greifeld, CEO of NASDAQ, where 10% of the market consists of non-U.S. companies. Last year, just 19 non-American companies listed American Depository Receipts in the U.S., compared with 50 in 2000. In the same period, the total amount of money raised through ADRs slid from more than $26 billion to just $9.6 billion, according to Thomson Financial. "A lot of companies are starting to think that listing in the U.S. no longer brings them the benefits they thought they'd get," says Lee Neumann, a Paris attorney who advises European companies on American listings. The disenchantment with U.S. share issues dates to mid-2002, when President George W. Bush signed the Sarbanes-Oxley Act into law, forcing foreign companies with American listings to meet more stringent accounting and reporting standards. Sarbanes-Oxley, says Dassault's Charlès, has complicated his operations. Dassault's quarterly reports, for example, are prepared using U.S. accounting standards, while half-year reports are done under French rules, which Charlès says can lead to investor confusion. Some of the disaffection may be temporary. One of the repercussions of Parmalat and other Euro-scandals, analysts note, will be that Europeans have to conform to new corporate governance standards that are just as tough as those in America. Rules recently adopted by France's securities watchdog, for example, require the top 10 executives in every public company to disclose an unprecedented amount of personal financial information. "Companies are probably going to return to the U.S.," says Richard M. Kosnick, chief of the securities practices unit at New York law firm Jones Day. "U.S. markets are still the most efficient." Perhaps. But it may be a while before companies such as LVMH see a U.S. listing as an affordable luxury.  By John Rossant in Paris Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
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