Congress passed Sarbanes-Oxley in response to a host of cases in which investors lost money and employees lost their retirement savings through organizational wrong-doing. Of course Enron and Worldcom are the cases that come to mind immediately. They were just the tip of the iceburg though.

This article from today’s Dallas Morning News talked about one of the consequences of Sarbanes-Oxley. Rather than initial public offerings (IPOs), firms are allowing themselves to be acquired in order to secure funding for growth.

While only time will tell, I’m curious to see what this means for questions like:

If you are hoping to buy stock of the next Cisco, Dell, or Microsoft, how will you do it? (Perhaps, you will have to settle for buying shares of companies that buy the small companies. If so, would this be a bad thing?)

How will the gap between the “haves” and the “have nots” be impacted? While it is rare for one to go from a middle income to megarich, stock appreciation can be a strategy for increasing (or reducing) one’s wealth apart from working.

What does the change mean for NASDAQ? A lot of smaller companies are first traded on NASDAQ.

How will other venture capital firms and lenders of all types need to change their approach?

Will the impact of Sarbanes-Oxley ultimately be that companies are reluctant to take risks? It seems to me that this is a possibility. From this article, it sounds like others have had this thought as well.

Filed by Coleen Davis at 4:47 pm under Business Acumen, Business Articles, Business Trends