From that quintessential Fortune 500 consulting firm, McKinsey, comes a tract on "restarting the small business growth engine." True to McKinsey's data-driven ways, there are lots of interesting charts about small business, and some "myths" that the firm wants to declare and then discharge. There is also at least a little idiocy, to wit:
Many business leaders will tell you that taxes and regulation are the biggest barriers to starting up and enlarging small businesses. It’s true that some regulations and laws have inhibited the growth of small businesses; the Sarbanes–Oxley Act, for instance, had the unexpected consequence of discouraging some companies from making initial public offerings, a step typically followed by a burst of hiring. (emphasis added)That is asinine. Nobody with two brain cells to rub together did not expect Sarbanes-Oxley, especially the requirement for an "internal controls" audit, to discourage initial public offerings. Since its passage, I have not met a single top executive of a public company, not one, who would not prefer to work for a private company.
If a consequence is obvious -- and this one was -- then it can neither be "unintended" nor "unexpected," no matter what a politician might say in self-defense after the fact. For McKinsey to assert that Sarbanes-Oxley was not designed to discourage small and unprofitable companies from "exiting" to the public markets is embarrassing.