This is an excerpt from the August 14, 2006 QuickTake by Robert D. Kugel of Ventana Research.

Critics of the Sarbanes-Oxley Act (SOX) have been pointing to the nearly total migration of large initial public offerings (IPOs) to non-U.S. exchanges in 2005 as proof that the law is counterproductive, driving new issuers to list on other countries' exchanges. Ventana Research thinks they have a valid point, but the policy implications are much more nuanced than simply rolling back the law could address. We believe Sarbanes-Oxley will not disappear and, indeed, over time we expect there will develop a "race to the top" approach to disclosure requirements around the world. Yet the era of regulatory dominance the United States has enjoyed since the end of the Cold War is over. It is unlikely that politicians will pass securities regulations as sweeping as SOX again without considering the potentially negative consequences for the U.S. capital markets.

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