The USA vote of no confidence
British companies used to seek listings in New York and London to demonstrate their international credentials. They hoped an American share quotation would bring in new investors – especially those used to paying higher price-earnings ratios.
The downside – other than discovering little US interest in UK shares – was having to subscribe to both American and British regulation and accounting standards. And since rules were tightened after the Enron and WorldCom scandals, UK companies such as Cable & Wireless and British Energy have decided it is not worth the hassle and cancelled their US listings.
It is no surprise therefore that the fund management company Invesco has decided not to continue with its duel listing. The surprise is that this British company plans to scrap its London primary listing and keep the New York Stock Exchange quotation. Indeed it is prepared to abandon its UK registration and re-register in the Bahamas to make the change.
Does Invesco really think the Sarbanes-Oxley regulations, the Securities & Exchanges Commission and US Gaap really better than UK governance? Or does it simply think American investors will rate its shares more highly than the City. And what should its unit trust and ISA customers and pension fund clients think of this vote of no-confidence in the London Stock Exchange?
