Easier Rules Lure Foreign Firms to List in U.S.; China's Alibaba Is Latest Big Overseas Company Coming to America; Some Investors Have Concerns
Looser corporate-governance standards are luring foreign companies to U.S. markets, a development causing concern among some large investors.</br></br>Overseas companies like Chinese e-commerce giant Alibaba Group Holding Ltd. have recently opted to list their shares in New York rather than in their home markets or on other international exchanges, in part because the U.S. in some respects is more lenient, people familiar with the matter say.</br></br>Unlike venues in London and Hong Kong, their main rivals in the race for global listings, the New York Stock Exchange and the Nasdaq Stock Market allow corporate insiders who collectively own less than half their companies' stock to exercise control through dual-share structures and other means. In addition, many foreign companies are exempted from some of the disclosure requirements imposed on U.S. corporations.</br></br>"If you're looking to do dual-class, the U.S. is where you can do that," said Alex Cohen, a former Securities and Exchange Commission official who is now a partner at law firm Latham & Watkins LLP. "That's certainly a draw for some companies."</br></br>So far this year, at least 15 foreign companies have filed papers in preparation for initial public offerings in the U.S., according to a search of securities filings, with most likely to trade on Nasdaq or the NYSE. That puts 2014 on track to be the busiest year for such filings since at least 1996--though the increase in activity comes amid a broader pickup in IPOs, with firms listing at the fastest rate in years.