Tuesday’s WSJ Review and Outlook asks, “Whatever Happened to IPOs?” The editorial correctly highlights the problems of today’s regulatory environment and how they mitigate what free markets would otherwise do. (We’re looking right at you, Sarbanes-Oxley.)
I wouldn’t go so far as to say onerous regulation is the sole culprit of lesser IPO activity—these things wax and wane through time, and eventually folks will want to tap the equity markets again (probably when it’s less cheap to simply borrow at low ultra low rates or tap private capital with the snap of a finger).
As mentioned in my book review on Fisher Investments MarketMinder last July, this world is vastly more regulated now than bygone days. Yet, much of the intelligentsia believes in some mythical “age of deregulation” starting with the Reagan presidency. The confusion lies in a mix up between actual regulation (i.e., rules) and an era of privatization. Indeed, the last 30 years have been a global era of privatization—a tremendous thing, not just for stocks, but for society. But we’ve piled on more and more rules at avalanche rate.
We can dither a bit about the dissolution of Glass-Steagall and Gramm-Leach-Bliley, but otherwise, I’m not going there—finding a corner of the economy, let alone financial industry, that isn’t more regulated today than it was, say, 25 or 30 years ago, is a tough task indeed.