Practice Quiz

FRM Financial Risk Manager Practice Test

Category - Terms and concepts

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Sarbanes-Oxley (SOX) might keep a firm from going public for which of the following reasons?
  1. Compliance cost.
  2. Health care costs.
  3. Liquidity requirements.
  4. ARPU.
  5. All of the above.
Explanation
Sarbanes-Oxley was a result of the Enron/Tyco/WorldCom corporate scandal and requires substantial additional overhead to meet compliance and reporting requirements.

Key Takeaway: When looking at exit situations for small companies, an IPO is less attractive because being public means substantial overhead to meet SOX compliance standards.
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